German Stocks Rise as Deutsche Boerse Surges on Approach

German stocks advanced to a three-week high as Deutsche Boerse AG rallied after CME Group Inc. was said to approach the operator of the Frankfurt exchange to consider merger talks.

Deutsche Boerse jumped the most in more than seven months. Volkswagen AG climbed as a gauge of carmakers posted the biggest gain among the 19 industry groups in the Stoxx Europe 600 Index. K+S AG rose to the highest in more than two months as Citigroup Inc. upgraded its recommendation on the shares.

The DAX Index increased 1.5 percent to 7,773.19 at the close of trading in Frankfurt. The benchmark gauge has climbed 2.1 percent so far this year as U.S. lawmakers agreed on a budget avoiding automatic fiscal changes that had threatened to push the world’s biggest economy into recession. The broader HDAX Index added 1.3 percent today.

“There was some quite high volume buying this morning which pulled the index higher,” Angus Campbell, head of market analysis at Capital Spreads in London, said in a telephone interview. “M&A activity has also supported the rally.”

The volume of DAX-listed shares changing hands today was 48 percent greater than the 30-day average, according to data compiled by Bloomberg.

The gauge had gained as much as 2.6 percent after an early poll from SkyTG24 Tecne showed Pier Luigi Bersani of Italy’s Democratic Party, which favors maintaining budget rigor, on track to win parliamentary elections. The index pared its advance after a separate survey by Istituto Piepoli for RAI, the country’s public broadcaster, forecast Silvio Berlusconi’s People of Freedom and the allied Northern League may win the largest share of the vote for the senate, or upper house.

In Italy, prime ministers require control of both houses of parliament. The election finished at 3 p.m. and the Interior Ministry is expected to release official results later today.

Japan Bank

In Japan, Prime Minister Shinzo Abe will probably nominate Asian Development Bank President Haruhiko Kuroda as Bank of Japan governor, according to two officials with knowledge of the discussions. Kuroda said earlier this month additional monetary easing can be justified for 2013.

Deutsche Boerse jumped 5.6 percent to 49.30 euros, after earlier rising as much as 12 percent. CME, the world’s largest futures exchange, has approached the operator of Frankfurt’s stock exchange to consider beginning talks on a merger, according to four people familiar with the situation.

CME contacted Deutsche Boerse at the end of last year, before IntercontinentalExchange Inc. announced plans to buy NYSE Euronext on Dec. 20, said the people, who asked not to be identified as the information is private. Deutsche Boerse, which had its takeover of NYSE Euronext blocked by European regulators a year ago, is hesitant about entering talks, the people said.

Deutsche Boerse said it isn’t in merger talks with CME.

Carmakers Gain

Volkswagen, Europe’s biggest carmaker, advanced 1.5 percent to 166.20 euros. Bayerische Motoren Werke AG, the largest manufacturer of luxury cars, added 2.6 percent to 70.58 euros for its biggest gain this year.

K+S AG climbed 2.6 percent to 35.77 euros as Citigroup Inc. upgraded the stock to buy and raised the forecast price on the shares to 42 euros from 38 euros. A recovery in potash demand, driven by new contracts from India, should support K+S, Citigroup said.

Wirecard AG, a provider of Internet-payment and processing services, jumped 3.2 percent to 19.99 euros, a record high, as it formed a partnership with Vodafone Group Plc.

Merck Rises

Merck KGaA, the maker of the Erbitux cancer drug, reversed earlier losses, rising 0.8 percent to 106.45 euros, its highest price in more than two months. The company’s experimental tumor-fighting drug cilengitide failed to help patients with a form of brain cancer in a late-stage clinical trial.

The medicine didn’t significantly increase overall survival in patients with newly diagnosed glioblastoma when added to standard chemotherapy, the Darmstadt, Germany-based company said in a statement today.

Fresenius Medical Care AG, the world’s biggest provider of kidney dialysis, dropped 1.5 percent to 52.32 euros. Goldman Sachs Group Inc. analyst Veronika Dubajova said that the voluntary recall by Affymax Inc. and Takeda Pharmaceutical Co. of their Omontys anemia treatment for kidney dialysis patients after reports of fatal reactions was negative for Fresenius Medical. The German provider of kidney dialysis has been using Omontys for about 18,000 U.S. patients on a trial basis.

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