German Stocks Advance as Confidence Data Beat ForecastsJonathan Morgan
German stocks advanced, rebounding from their biggest drop in more than two weeks, as business confidence in Europe’s largest economy rose more than forecast to a 10-month high in February.
Deutsche Telekom AG, Germany’s largest phone company, rallied the most in six weeks as Equinet AG upgraded its recommendation on the shares. Volkswagen AG, Europe’s biggest carmaker, slumped the most in 16 months as its forecast for 2013 profit missed analysts’ estimates.
The DAX Index rose 1 percent to 7,661.91 at the close of trading in Frankfurt, bringing this week’s increase to 0.9 percent. The benchmark gauge has climbed 0.7 percent so far this year, among the worst performers of 24 developed-market indexes tracked by Bloomberg. The broader HDAX Index also added 1 percent today.
“The confidence figures are good, but what we are seeing today is a technical rebound from yesterday’s huge losses,” Soeren Steinert, who helps manage about $23 billion as associate director for equities trading at Quoniam Asset Management GmbH in Frankfurt, said in a telephone interview.
The volume of DAX-listed shares changing hands today was 12 percent greater than the 30-day average, according to data compiled by Bloomberg.
The Ifo institute in Munich said its business-climate index, based on a survey of 7,000 executives, climbed to 107.4 from 104.3 in January. That’s the fourth straight gain. Economists had predicted an increase to 104.9, according to the median of 38 forecasts in a Bloomberg News survey.
Even so, the European Commission cut its outlook for the euro-area economy today, saying it will shrink in back-to-back years for the first time. The 17-nation region’s gross domestic product will fall 0.3 percent this year, compared with a November prediction of 0.1 percent growth, the Brussels-based commission forecast.
The European Central Bank said financial institutions will return 61.1 billion euros ($80.4 billion) of its second three-year loan next week, half the amount forecast by economists. The ECB flooded financial markets with more than 1 trillion euros in loans, known as Longer Term Refinancing Operations, a year ago after banks stopped lending to each other. Feb. 27 is the first opportunity for early repayment of the second LTRO.
Deutsche Telekom rose 1.9 percent to 8.16 euros as Equinet upgraded the stock to buy from accumulate. Risks such as a loss of market share in mobile and fixed-line communications are reflected in Deutsche Telekom’s share price, the analysts said. Equinet said it expects full-year free cash flow to top the company’s guidance of 6 billion euros by 200 million euros.
Volkswagen slumped 7 percent to 163.80 euros, the biggest drop since October 2011, as the carmaker forecast 2013 operating profit will match last year’s level of 11.5 billion euros. The average estimate of 14 analysts surveyed by Bloomberg was for profit of 14 billion euros this year.
Rheinmetall AG, the automotive, electronics, defense, and engineering group, fell 1.8 percent to 41.47 euros as HSBC Holdings Plc downgraded the stock to neutral from overweight.
Commerzbank AG retreated 1.3 percent to 1.41 euros, a fourth day of losses, as Germany’s second-biggest lender said it will cut 1,800 jobs by the end of 2015. DZ Bank AG downgraded the shares to sell from hold.