German Stocks Advance for Fifth Day; BMW, Daimler, Leoni Shares Lead Gains
German stocks advanced for a fifth day, the longest winning streak in three weeks, as Bayerische Motoren Werke AG and Daimler AG led carmakers higher and Leoni AG (LEO) raised its earnings forecast.
BMW and Daimler rose more than 1 percent. Leoni, a maker of automotive electrical cables, jumped the most in three months. Dialog Semiconductor Plc (DLG) climbed 4.2 percent after reporting second-quarter earnings. Commerzbank AG (CBK), Germany’s second- biggest bank, followed a selloff in European lenders as President Barack Obama and Congress failed to reach a deal on increasing the U.S. debt limit.
The benchmark DAX Index rose 0.3 percent to 7,344.54 at the 5:30 p.m. close in Frankfurt. The gauge climbed 1.5 percent last week after euro-area leaders agreed to a second bailout for Greece. The measure has still lost 2.4 percent from this year’s high on May 2 amid concern that Europe’s fiscal crisis will derail the economic recovery. The broader HDAX Index (HDAX) also added 0.3 percent today.
UBS AG strategists upgraded European equities to “overweight” and downgraded U.S. stocks to “underweight,” saying valuations in the euro region “look very attractive” compared with North America. The DAX is trading at 12.1 times its companies’ reported earnings, near the cheapest since 2008.
“With near-term concerns about Europe to the side and U.S. markets near the highs of the year, risk reward currently favors European markets,” New York-based strategist Jeffrey Palma wrote in a report to clients dated yesterday. “Last week’s commitment by European Union leaders to the euro-zone project has helped to calm fears.”
BMW and Daimler, the world’s biggest makers of luxury cars, climbed 2.7 percent to 73.52 euros and 1.1 percent to 53.04 euros, respectively. Carmakers were among the best performers across Europe today.
Leoni rallied 5.5 percent to 42.22 euros after saying it expects sales of about 3.6 billion euros and earnings before interest and taxes of about 230 million euros in fiscal 2011. Its earlier target was revenue of about 3.4 billion euros and Ebit of about 210 million euros.
Dialog Semiconductor gained 4.2 percent to 14.65 euros, the highest in more than two months, after the supplier of complex analog and digital integrated circuits posted second-quarter Ebit of $13.1 million.
Sartorius AG (SRT) preferred shares jumped 6.2 percent to 34.08 euros, the biggest gain in almost two months. The maker of laboratory scales and filtering equipment raised its forecast for 2011, saying sales in constant currencies will grow by 8 percent to 10 percent and operating earnings before interest, taxes and amortization as a share of revenue will rise to 14.5 percent to 15.5 percent.
Norma Group rose 2.3 percent to 18.87 euros as the maker of fasteners and joining technology raised its forecasts for growth in sales and operating earnings.
Nordex SE added 1.2 percent to 5.24 euros as the alternative-energy company’s U.K. unit won an order to supply 21 wind turbines to the Scottish Baillie Wind Farm.
Commerzbank lost 4 percent to 2.71 euros, ending three days of gains. Banking shares posted the worst performance among 19 industry groups in the benchmark Stoxx Europe 600 Index, declining 2.8 percent.
U.S. House Speaker John Boehner told Republicans that there’s no agreement on a plan for raising the ceiling before a default threatened for Aug. 2, risking a cut to the nation’s AAA credit rating. As Democrats and Republicans endorsed dueling plans for raising the debt ceiling, China, the top holder of American debt, said it remains confident an agreement will be reached before the deadline, according to Xia Bin, an adviser to the People’s Bank of China.
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