German Stocks Advance as Economic Confidence Increases
German stocks advanced, after yesterday sliding the most in three weeks, as a measure of economic confidence for the euro area rose more than forecast.
European Aeronautic, Defence & Space Co. climbed to its highest price since its initial public offering in 2000 after predicting earnings will increase in 2013. Kabel Deutschland (KD8) Holding AG posted its biggest decline in a week after Vodafone Group Plc was said to put on hold its plans to approach the company about a takeover.
The DAX (DAX) gained 1 percent to 7,675.83 at the close in Frankfurt. The equity benchmark dropped 2.3 percent yesterday, its biggest slide since Feb. 4, as Italy’s voters gave former premier Silvio Berlusconi a blocking minority in the upper house of parliament. The broader HDAX Index added 1.1 percent today.
“The Italian elections are worrisome because there is the risk that reforms that are underway may be blocked for the coming months,” said Benoit Peloille, an equity market strategist at Natixis in Paris. “Still, this doesn’t call into question the rotation into stocks, which remain the only asset class that hasn’t yet benefited from the abundance of liquidity. For us, stocks remain fundamentally attractive.”
Italy sold 6.5 billion euros ($8.5 billion) of securities at the first auction since elections at the weekend. None of the coalitions taking part in the vote managed to win a majority in both houses of the country’s parliament. The Treasury sold 4 billion euros of new 10-year bonds at an average yield of 4.83 percent, up from 4.17 percent at a previous auction on Jan. 30. Investors bought 2.5 billion euros of five-year notes at 3.59 percent, compared with 2.94 percent at last month’s sale.
Economic confidence in the euro area increased more than economists had forecast. An index of executive and consumer sentiment rose to 91.1 in February from a revised 89.5 in January, the European Commission in Brussels said. Economists had forecast an increase to 89.9, according to the median of 29 estimates in a Bloomberg News survey.
EADS jumped 6.5 percent to 37.08 euros. The company predicted that operating profit will rise to 3.5 billion euros this year and said that it has booked the majority of charges to fix the wings on its A380 flagship aircraft. The company also said that output climbed at its Airbus SAS division and production rebounded at its commercial helicopter business, lifting profit by 68 percent in 2012.
Kabel Deutschland fell 3.7 percent to 67.03 euros. Vodafone suspended its plans after leaks complicated internal discussions, according to three people familiar with the matter.
Vodafone, which had intended to contact Kabel Deutschland after the cable provider’s earnings report last week, no longer has a time frame for making an approach, said the people, who asked not to be identified because the deliberations remain confidential. Kabel Deutschland advanced more than 9 percent since Manager Magazin reported Vodafone’s plans on Feb. 13 through yesterday.
MorphoSys AG (MOR) sank 6.4 percent to 31.01 euros, for its biggest two-day drop in more than 18 months, after the biotechnology company was cut to hold from buy at Commerzbank AG. The analysts cited the stock’s gain since the company reported clinical trial data on MOR103 in September, and also said they don’t expect guidance for 2013 to serve as a trigger.
Salzgitter AG (SZG) climbed 6.1 percent to 37.17 euros. Germany’s second-largest steelmaker was raised to overweight from neutral at JPMorgan Chase & Co. after the company forecast pretax profit in the “lower double-digit” million-euro range in 2013.
“This we believe represents realistic trough earnings for an already underperforming stock,” analyst Alessandro Abate wrote in a note.
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