German Stocks Advance as Fed’s Evans Supports StimulusJonathan Morgan
German stocks advanced for a second day as Federal Reserve Bank of Chicago President Charles Evans said the U.S. central bank should keep policy accommodative to support the world’s biggest economy, and as Chinese markets rose, offsetting a drop in euro-area industrial output.
Fresenius Medical Care AG increased 2 percent as Berenberg Bank upgraded its recommendation on the stock. Continental AG, Europe’s second-largest maker of auto parts, fell 1.5 percent after saying sales and profitability growth may slow this year.
The DAX Index rose 0.2 percent to 7,729.52 at the close of trading in Frankfurt. The measure has gained 1.5 percent since the start of the year as U.S. politicians agreed on a compromise budget to prevent most scheduled tax increases and delay spending cuts. The broader HDAX Index added 0.1 percent today.
“Markets are in green territory, helped by some positive statements by the Fed’s Evans, indicating that the Fed should continue to support the economic recovery, and the strong performance of the Chinese market amid talks it could allow investors to buy more in domestic markets,” Guillermo Hernandez Sampere, head of trading at Fpm Frankfurt Performance Mgmt AG, who helps manage about 500 million euros ($652 million), wrote in a message.
The U.S. government should put “in place policies that slowly but surely bring the prospects of future revenues into balance with future spending,” Evans said in remarks in Hong Kong today. “Under this scenario, monetary policy has an important contribution to make.”
China’s stocks rose the most in a month after the head of the securities regulator said the nation can increase by 10 times the size of two investment programs that allow foreign investors to buy securities.
Euro-area industrial production unexpectedly fell in November. Output dropped 0.3 percent from October, when it declined a revised 1 percent, the European Union’s statistics office in Luxembourg said today. Economists had forecast an increase of 0.2 percent, according to the median of 37 estimates in a Bloomberg News survey.
Fresenius Medical Care gained 2 percent to 49.18 euros as Berenberg Bank raised the stock to buy, saying a recent selloff in the shares has created a good buying opportunity.
Investors have ignored the underlying quality of the Fresenius Medical Care business and the earnings potential, according to Berenberg Bank.
Munich Re, the world’s largest reinsurer, added 0.9 percent to 136.50 euros as Barclays Plc raised its rating on the stock to overweight from equal weight.
Sky Deutschland AG advanced 1.9 percent to 4.69 euros after Rupert Murdoch’s News Corp. increased its stake in the German pay-TV company to 54.5 percent from 49.9 percent by buying new Sky shares for 347.4 million euros ($464 million).
The deal is part of a financing package valued at almost 1 billion euros Sky agreed with News Corp. and lenders to help the pay-TV operator win more customers, Sky Chief Financial Officer Steven Tomsic said on a conference call today.
Linde AG rose 1.6 percent to 130.60 euros. The industrial gases company reiterated its 2013 operating profit target of at least 4 billion euros.
Continental fell 1.5 percent to 83.75 euros after saying sales and profitability growth may slow in 2013 as the region’s market contraction causes unpredictability for the global car industry.
Europe’s second-largest maker of auto parts forecast sales will rise about 5 percent this year, compared with an increase of about 7 percent in 2012. Adjusted earnings before interest and taxes will “remain above 10 percent” of revenue, versus a 10.7 percent margin last year, the Hanover, Germany-based company said in a statement today.
Deutsche Bank AG fell 0.7 percent to 36.99 euros. Germany’s top criminal court upheld the first convictions in a tax-evasion probe that has spread to two of the highest ranking officials at the country’s biggest lender.
The Federal Court of Justice rejected the appeals of four of six men found guilty in December 2011 of evading a total of 260 million euros in taxes on carbon emission trades, according to a ruling posted on the court website today.
The ruling is part of a wider probe in which Deutsche Bank co-Chief Executive Officer Juergen Fitschen and Chief Financial Officer Stefan Krause, are being investigated. The bank was raided for a second time in December and five bank employees were arrested.