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German Stocks Advance as Chinese Output Accelerates

Nov. 11 (Bloomberg) -- German stocks advanced as a report showing China’s industrial output growth unexpectedly accelerated last month outweighed declines in Deutsche Telekom AG and Daimler AG.

Telefonica Deutschland Holding AG rose 2.6 percent after UBS AG added the shares to its most preferred list. Daimler fell after Bank of America Corp. put the stock on its list of least-favored auto shares. Deutsche Telekom lost the most on the benchmark DAX Index after agreeing to buy GTS Central Europe for 546 million euros ($730 million) and Goldman Sachs Group Inc. separately downgraded the telephone-service provider.

The DAX added 0.3 percent to a record 9,107.86 at the close of trading in Frankfurt. The index gained 0.8 percent last week after better-than-forecast U.S. economic growth and payrolls data. The broader HDAX Index climbed 0.4 percent today.

“The figures imply growth in China -- that’s positive,” Henrik Drusebjerg, who helps oversee $220 billion as a senior strategist at Nordea Bank AB in Copenhagen, said by telephone. “If you combine that with the job report from the U.S. on Friday I think that there is a good reason for European investors to be slightly optimistic.”

In China, industrial production jumped 10.3 percent in October from a year earlier, the National Bureau of Statistics said Nov. 9. That was higher than September’s 10.2 percent and exceeded the 10 percent median projection of economists surveyed by Bloomberg. Inflation was a less-than-forecast 3.2 percent.

Chinese Leaders

President Xi Jinping and top Communist Party leaders have gathered in Beijing for a meeting known as the third plenum to outline a blueprint to sustain growth and drive urbanization in the world’s second-biggest economy. The meeting of about 370 officials will conclude tomorrow.

Telefonica Deutschland climbed 2.6 percent to 6 euros. UBS added the stock to its most preferred list, citing an improving performance after the first quarter of 2014 when it annualizes price cuts.

Software AG gained 4.4 percent to 28.90 euros after HSBC Holdings Plc upgraded Germany’s second-largest software maker to overweight, similar to a buy rating, from neutral, citing a pickup in growth that it said may exceed consensus forecasts.

Daimler, the world’s third-biggest luxury-vehicle manufacturer, retreated 0.7 percent to 59.05 euros. Bank of America added the stock to its least preferred list, citing uncertainty regarding its free cash flow.

Deutsche Telekom

Deutsche Telekom dropped 0.9 percent to 11.24 euros, its lowest price in a month. Germany’s biggest telephone-service provider agreed to buy Warsaw-based GTS Central Europe, giving it landline grids in Poland, the Czech Republic, Hungary and Romania, where its services are currently mostly wireless.

Separately, Goldman Sachs downgraded Deutsche Telekom to sell from neutral, saying future earnings are limited by intense competition and capital spending increases will be long-term rather than temporary.

Nordex SE, a wind-turbine maker, tumbled 16 percent to 11.49 euros, its biggest drop in more than five years, after German Chancellor Angela Merkel’s government coalition negotiators agreed to reduce the target for offshore wind turbines and to cut aid for new wind-power projects.

To contact the reporter on this story: Jonathan Morgan in Frankfurt at jmorgan157@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net

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