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German Stocks Gain as U.S. Adds More Jobs Than Expected

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Dec. 6 (Bloomberg) -- German stocks advanced, paring the DAX Index’s biggest weekly drop since August, as a report showed that U.S. employers hired more workers last month than economists had forecast.

Deutsche Telekom AG climbed 1.7 percent as Exane BNP Paribas upgraded Europe’s largest telecommunications operator. Hochtief AG fell the most in seven weeks as Commerzbank AG recommended selling shares in the builder controlled by Spain’s Actividades de Construccion & Servicios SA.

The DAX advanced 1 percent to 9,172.41 at the close in Frankfurt, following four consecutive days of losses. The equity benchmark has dropped 2.5 percent this week as a report showed U.S. companies hired workers at a faster-than-expected pace last month, reigniting concern the Fed will slow the rate of asset buying. The gauge has rallied 20 percent this year. The broader HDAX Index rose 0.9 percent today.

“We’ve had some very bad days for the last four days where the DAX went down sharply from an all-time high,” Herbert Perus, who helps oversee about $36 billion as head of equities at Raiffeisen Capital Management in Vienna, said by phone. “It seems this technical correction has been overdone with investors taking profits despite falling prices, therefore the correction accelerated. We feel we can go up to the end of the year.”

A Labor Department report showed that U.S. employers added 203,000 workers in November, exceeding the median economist estimate in a Bloomberg survey of 185,000 net hires. Payrolls rose by a revised 200,000 in October. The report also showed that the unemployment rate fell to 7 percent last month, its lowest level since November 2008.

Deutsche Telekom

Deutsche Telekom added 1.7 percent to 11.54 euros after Exane upgraded the phone company to outperform, which is similar to a buy rating, from neutral. Deutsche Telekom’s U.S. business should experience earnings growth of at least 10 percent next year, stabilizing cash flow at a group level, according to Exane. The brokerage also increased its price forecast on the shares to 12 euros from 10.50 euros.

Volkswagen AG, Europe’s biggest automaker, and Daimler AG, the world’s largest maker of luxury cars, advanced 1 percent to 186.20 euros and 1.7 percent to 59.30 euros, respectively, as a gauge of European carmakers climbed 1.1 percent.

Hochtief retreated 2.9 percent to 59.50 euros after Commerzbank downgraded the builder to reduce, which is similar to a sell rating, from hold. The brokerage cited the recent rally by Hochtief’s shares -- they have gained 35 percent this year -- and the impending completion of a share buyback. Hochtief will acquire as many as 4.3 million shares, representing a stake of 5.6 percent, by the time it completes the buyback on Dec. 13, the company said in a statement.

UBS AG downgraded Hochtief to sell from neutral, also citing the strong performance of the shares this year and the poor performance of Leighton Holdings Ltd. Shares in Hochtief’s Australian subsidiary have fallen 20 percent since Oct. 2 when a newspaper reported that former executives knew about the paying of bribes to win contracts.

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

To contact the editor responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net

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