German Stocks Advance, Paced by Siemens; Lufthansa Gains
German stocks rose for a second day, led by lenders, as a European Central Bank survey showed credit standards are improving and as U.S. Federal Reserve policy makers met to discuss monetary policy.
Commerzbank AG (CBK) and Deutsche Bank AG (DBK) rallied at least 2 percent. Siemens AG (SIE), Europe’s largest engineering company, gained even after cutting an annual profit forecast, as Commerzbank said the stock already reflects the downgrades of profit estimates. Deutsche Lufthansa AG (LHA) added 3.8 percent after Morgan Stanley recommended the stock.
The DAX Index added 1.7 percent to 6,704.5 in Frankfurt as the Federal Open Market Committee, led by Fed Chairman Ben S. Bernanke, continued deliberations for a second day. The benchmark gauge yesterday rebounded from the lowest level in almost three months as a report showed sales of new U.S. homes exceeded economists’ forecasts in March. The broader HDAX Index increased 1.8 percent today.
“The Fed has no desire to go into more quantitative easing in a meaningful way but Bernanke is trying to cover all avenues and not be accused of changing policy dramatically,” Chris Beauchamp, an analyst at IG Index in London, said in reference to the central bank’s policy of buying bonds to stimulate the economy. “In Europe, ECB operations have shown it has the ability to ease conditions.”
The Fed panel will today probably repeat that subdued inflation and economic slack will result in “exceptionally low” interest rates through at least late 2014 in the world’s largest economy, economists said.
Europe Credit Flow
The ECB said in its quarterly Bank Lending Survey that banks tightened credit standards much less in the first quarter than in the previous three months and expect more demand for corporate loans in the second quarter.
The DAX (DAX) has gained 30 percent since September as the ECB lent more than $1.3 trillion to financial companies to stop credit markets from freezing.
Commerzbank climbed 5.2 percent to 1.62 euros. Deutsche Bank increased 2.1 percent to 34.14 euros.
Siemens added 1 percent to 70.53 euros. The company said today it now expects annual net income from continued operations of 5.2 billion euros ($6.9 billion) to 5.4 billion euros, down from a 6 billion-euro target. Analysts foresaw a cut of that magnitude. Siemens’ second-quarter profit missed estimates.
Analysts have cut their 2012 earnings estimates for the German company to 6.43 euros from 8 euros in March 2011, according to estimates compiled by Bloomberg.
“Unnoticed in the dust of health-care growth pains, energy margin pressure, industry macro concerns and execution issues, Siemens has become an attractively valued share with low expectations,” Commerzbank analyst Ingo-Martin Schachel wrote in a report today, as the bank raised its recommendation to “buy” from “hold.”
Lufthansa, Europe’s second-biggest airline, rose 3.8 percent to 9.93 euros. The stock was added to a list of “Best Ideas” in Europe by Morgan Stanley analysts in a report today. The bank also raised its price estimate for the shares to 14.35 euros from 14.25 euros previously.
Bayer AG (BAYN), the country’s largest drugmaker, rose 2.2 percent to 53.21 euros. The company is close to doing a multi-billion- euro acquisition, Reuters reported, citing unidentified sources and without providing more details. Christian Hartel, a spokesman for the company in Leverkusen, Germany, declined to comment. Standard & Poor’s raised the outlook for Bayer’s credit rating to positive from stable.
K+S AG (SDF), Europe’s biggest potash producer, added 4.4 percent to 37.61 euros. Mosaic Co., the largest North American maker of phosphate crop nutrients, said sales volumes for potash and phosphate in the quarter through May will be at the upper end of its previous forecast as demand increases.
KUKA AG (KU2), which manufactures production equipment, gained 4.9 percent to 17.67 euros. The stock was raised to buy from hold at Berenberg Bank.
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