German Stocks Advance Amid U.S. Budget Talks
German stocks advanced to a one-week high as automakers rallied, while U.S. Senate Majority Leader Harry Reid said there has been no progress on budget talks.
Volkswagen AG (VOW) climbed 0.9 percent after its Audi unit said it plans to spend 13 billion euros ($17.3 billion) on new-car development and expansion. Daimler AG (DAI) climbed after saying its truck sales in the last 11 months increased from a year earlier. BASF SE (BAS), the world’s biggest chemical maker, added 0.9 percent.
The DAX Index gained 0.3 percent to 7,655.88 at the close. in Frankfurt after a report cited Finance Minister Wolfgang Schaeuble as saying the worst of the euro-area debt crisis is over. The benchmark gauge has rallied 30 percent so far this year, the second-best performance among the 24 developed markets tracked by Bloomberg, as the European Central Bank and the Federal Reserve expanded asset purchases. The broader HDAX Index increased 0.2 percent today.
“There is increased optimism, thanks to less stress about the debt crisis,” said Jacques Porta, who helps manage $627 million at Ofi Patrimoine in Paris. “Europe and the ECB seem to be taking the right decisions to solve their financial problems. On the U.S. budget talks, investors are hoping for an agreement, but it’s difficult to forecast. Trading volumes will be low until the end of the year.”
Stocks pared an earlier gain of as much as 0.5 percent after Reid said the world’s largest economy may be headed for the so-called fiscal cliff of more than $600 billion in automatic tax increases and spending cuts scheduled to come into effect in January. “Nothing is happening” in budget talks in Washington, Reid said.
U.S. President Barack Obama is pushing lawmakers to agree on an interim deal to avert the more than $600 billion of automatic deficit-reduction measures. Republican House leaders will hold a conference with party members today to discuss the next steps in budget negotiations, according to an aide who sought anonymity to discuss the issue.
Treasury Secretary Timothy Geithner said in a letter to Congress yesterday the country’s federal debt limit will be reached on Dec. 31 and his department will begin using “extraordinary measures” to finance $200 billion in deficits into early 2013.
Schaeuble said the worst of the euro-area debt crisis is over, according to an interview in Bild Zeitung.
The DAX Index (DAX) is on course to complete its best year since 2003 with bulls saying the gauge will become the first national benchmark in the euro area to exceed its 2007 peak for earnings.
This year’s performance marks a rebound from a 15 percent slump in 2011, when investors sold the DAX as a proxy for southern European markets where authorities had banned short selling.
The volume of shares changing hands on the benchmark index was 46 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.
Volkswagen’s preferred shares advanced 0.9 percent to 172.60 euros after Audi said it will spend 13 billion euros through 2016 on measures including development of new vehicles and technologies and increasing production capacity in China. The brand’s expansion is part of Volkswagen’s goal to become the world’s largest automaker by 2018.
Daimler rose 0.5 percent to 41.76 euros after the automaker said 11-month truck sales climbed to 424,000 vehicles from 371,000 a year earlier.
Bayerische Motoren Werke AG (BMW) gained 1.1 percent to 73.46 euros after Chief Financial Officer Friedrich Eichiner said he is confident the company has surpassed its 2011 profit total, according to a report by Die Welt.
BASF gained 0.9 percent to 71.80 euros. The maker of chemicals and plastics has surged 33 percent so far this year.
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