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German Stocks Rise on Speculation Yellen to Hold Stimulus

Nov. 14 (Bloomberg) -- German stocks climbed to a record as Federal Reserve chairman nominee Janet Yellen signaled the central bank will maintain stimulus measures until the U.S. economy improves.

Continental AG and Daimler AG followed European carmakers higher, gaining at least 1.5 percent. Infineon Technologies AG added 1.2 percent after Baader Bank advised investors to buy the shares. RWE AG tumbled the most in three months after forecasting profit will drop next year on weak power prices.

The DAX rose 1.1 percent to 9,149.66 at the close in Frankfurt, its biggest increase in five weeks. The gauge fell 0.6 percent in the past two days as data showed euro-area industrial output missed estimates. It has rallied 20 percent this year as central banks around the world maintained stimulus measures. The broader HDAX Index also gained 1.1 percent today.

“Yellen’s comments are good news for investors,” Matthias Jasper, head of equities at WGZ Bank AG in Dusseldorf, said in a phone interview. “The Fed is not going to change its policy any time soon and interest rates will remain low. I don’t think the Fed will start tapering before April next year. There’s a very high probability we will see a stocks rally continue into the year end.”

The volume of shares changing hands in DAX-listed companies was 27 percent higher than the 30-day average, according to data compiled by Bloomberg.

Fed Stimulus

Yellen, who has been nominated to replace Chairman Ben S. Bernanke when his term expires Jan. 31, said she will ensure monetary stimulus isn’t removed too soon to support economic recovery in the U.S.

“I consider it imperative that we do what we can to promote a very strong recovery,” she in response to a question during testimony today to the Senate Banking Committee in Washington. “It’s important not to remove support, especially when the recovery is fragile and the tools available to monetary policy, should the economy falter, are limited given that short-term interest rates are at zero.”

In Germany, gross domestic product rose 0.3 percent in the third quarter after a 0.7 percent-increase in the previous three months, according to the Federal Statistical Office in Wiesbaden. That matched the median projection of economists in a Bloomberg survey.

Carmakers Rally

Continental gained 1.7 percent to 147.90 euros and Daimler added 1.6 percent to 58.98 euros. A gauge of auto companies in the Stoxx Europe 600 Index advanced 1.1 percent today.

Infineon climbed 1.2 percent to 6.98 euros as Baader Bank raised its recommendation on the shares to buy from hold, saying investor expectations have become more realistic after the company reported third-quarter results this week and the stock’s annual performance trailed industry peers.

Infineon on Nov. 12 predicted a drop in first-quarter profitability. The stock has advanced 15 percent so far this year, compared with a 32 percent-gain for the Philadelphia Semiconductor Index.

RWE slid 5.1 percent to 25.76 euros, the biggest drop since August. Germany’s second-largest utility said recurrent net income, the measure used to calculate the dividend, will drop to 1.3 billion euros to 1.5 billion euros next year, from around 2.4 billion euros estimated for this year.

The “reduced earnings power, primarily in conventional electricity generation, will lead to a marked decline in the result of 2014,” RWE said in the statement.

EON SE, Germany’s biggest utility, lost 1.7 percent to 13.54 euros. EON said yesterday 2013 profit will be at the lower end of its forecast range following a 52 percent drop in nine-month earnings.

To contact the reporter on this story: Namitha Jagadeesh in London at njagadeesh@bloomberg.net

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

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