German Stocks Rise Second Day as European Bonds Advance

German stocks advanced for a second day as falling yields on European government bonds offset data showing the manufacturing and service industries in Europe’s largest economy unexpectedly dropped in April.

Aixtron SE jumped 10 percent after peer Veeco Instruments Inc. forecast higher bookings in the second quarter. Deutsche Lufthansa AG rose the most in three months, following European travel stocks higher. Deutsche Bank AG rose for a third day.

The benchmark DAX Index climbed 2.4 percent to 7,658.21 at the close of trading in Frankfurt. The measure rose 0.2 percent yesterday, snapping six days of losses, as Italy chose a president and the Bank of Japan’s stimulus policies went unopposed at a Group of 20 meeting. The broader HDAX Index rose 2.3 percent today.

“It looks like the yield compression in periphery countries is driving the market higher,” Ion Marc Valahu, co-founder and fund manager at Clairinvest in Geneva, wrote in an e-mail. “Also helping is that investors are running out of assets in the search for yield/performance and are starting to look at equities.”

The volume of shares changing hands in companies listed on the DAX was 29 percent higher than the average of the last 30 days, according to data compiled by Bloomberg.

The yield on Italian 10-year government bonds fell below 4 percent for the first time in almost 2 1/2 years, while Spanish and Portuguese yields dropped to the least since 2010. Borrowing costs in France and Ireland declined to the lowest on record.

PMI Drops

A gauge of German manufacturing from a survey by Markit Economics dropped to 47.9 from 49 in March, while the median estimate of 29 economists in a Bloomberg News survey was for no change. For services, the index fell to 49.2 from 50.9. Economists had predicted an increase to 51. Readings below 50 show contraction.

Separate data showed euro-area services and manufacturing output contracted for a 15th month in April. A composite index based on a survey of purchasing managers in both industries held at 46.5, London-based Markit Economics said.

In China, a report showed manufacturing is expanding at a slower pace this month. The preliminary reading of 50.5 for a purchasing managers’ index released by HSBC Holdings Plc and Markit compared with a final 51.6 for March. The number was also below the median 51.5 estimate in a Bloomberg News survey of 11 analysts.

Aixtron Jumps

Aixtron, a maker of equipment for the semiconductor industry, surged 10 percent to 10.66 euros, its biggest gain since March 15. U.S.-based Veeco forecast “meaningfully higher” bookings in the second quarter.

Lufthansa, Europe’s second-biggest airline, advanced 3.9 percent to 14.65 euros as European travel-related stocks rose.

Deutsche Bank, Germany’s biggest bank, led gains on the DAX, rising 5.1 percent to 31.69 euros.

Munich Re, the world’s largest reinsurer added 3.7 percent to 154.85 euros, its highest price since September 2002. Allianz SE, Europe’s largest insurer, added 4.1 percent to 109.15 euros. A gauge of insurers posted the biggest gain of the 19 industry groups on the Stoxx 600 Europe Index.

BASF SE advanced 2.5 percent to 67.66 euros. The world’s biggest chemical maker said it will cut about 500 jobs at its performance-products division making additives for the water, leather and textile industries in an initial round of restructuring to counter increased competition.

Sartorius Gains

Sartorius AG climbed 7.3 percent to 78.92 euros after reporting first-quarter revenue of 214 million euros ($278 million), compared with 208 million euros a year earlier. The maker of electronic equipment and components said it’s on course for further growth and confirmed its 2013 forecast for revenue growth of as much as 9 percent.

Commerzbank AG, Germany’s second-biggest bank, slipped 1.1 percent to 1.08 euros, its lowest price since at least August 1992, as it carried out a reverse share split.

Commerzbank reduced the number of shares to 583 million from 5.83 billion in the reverse share split, which is part of a 2.5 billion-euro capital increase plan.

Freenet AG declined 2.3 percent to 18.18 euros. Deutsche Bank downgraded Germany’s biggest non-network telecommunications company to hold from buy, citing limited upside to the shares after gains in the last year.

Borussia Dortmund GmbH fell 2.7 percent to 3.14 euros after Bayern Munich agreed to buy Mario Goetze, the 20-year-old midfielder whose 10 Bundesliga goals put him among Dortmund’s top four scorers this season.

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