German Stocks Advance, Extending Weekly Gain as RWE Rises

German stocks climbed, extending the benchmark DAX Index’s weekly advance, as RWE AG rebounded, banks followed European peers higher and property stocks rose.

RWE added 2.6 percent after two days of losses. Deutsche Bank AG and Commerzbank AG each climbed more than 1 percent. Lufthansa retreated 1.3 percent after Morgan Stanley downgraded its rating on the shares. Volkswagen AG lost 1.3 percent after reporting deliveries for the seven months through July.

The DAX Index climbed 0.2 percent to 8,391.94 at the close of trading in Frankfurt, for a 0.6 percent weekly gain. The gauge has risen 9.1 percent from its low on June 24 as the European Central Bank said interest rates will remain low for an extended period, and euro-area gauges of manufacturing and gross domestic product beat forecasts. The broader HDAX Index also rose 0.2 percent today.

The volume of shares changing hands in DAX-listed companies was 11 percent lower than the average of the last 30 days, according to data compiled by Bloomberg.

In the U.S., a Commerce Department report released today in Washington showed housing starts climbed 5.9 percent to an 896,000 annualized rate from a revised 846,000 pace in June that was higher than previously reported. The median estimate of 82 economists surveyed by Bloomberg was for a 900,000 rate.

Separate data showed consumer confidence in the world’s largest economy unexpectedly fell in August from a six-year high. The Thomson Reuters/University of Michigan preliminary index of consumer sentiment fell to 80 from 85.1 in July, which was the highest since July 2007. The median projection in a Bloomberg survey called for little change at 85.2.

RWE Recovers

RWE rose 2.6 percent to 21.27 euros. Germany’s second-largest utility yesterday posted the biggest decline on the DAX for a second day on speculation dividends may be cut by half after it reported first-half profit that missed estimates.

Deutsche Bank, Germany’s largest lender, gained 1.2 percent to 34.16 euros. Commerzbank, the second-biggest, advanced 2.5 percent to 8.24 euros. A gauge of European lenders posted the second-best performance of the 19 industry groups on the Stoxx Europe 600 Index.

Stada Arzneimittel AG added 2.4 percent to 37.92 euros. Germany’s biggest publicly traded maker of generic drugs said it acquired Thornton & Ross Ltd., a manufacturer of over-the-counter drugs, for 221 million pounds ($345.5 million).

Deutsche Wohnen AG, a German residential property company, gained 1.5 percent to 14.20 euros. Bank of America’s Merrill Lynch unit resumed coverage of the shares with a buy rating. Germany’s residential real estate sector may see “synergistic consolidation” in the mid-term, Merrill Lynch said in a note.

LEG Immobilien AG, Germany’s largest residential landlord by market value, added 1.4 percent to 41.38 euros.

Lufthansa Declines

Lufthansa, Europe’s second-largest airline, slid 1.3 percent to 14.20 euros. Morgan Stanley downgraded the shares to equal weight, similar to a hold rating, from overweight, saying a turnaround in earnings momentum is needed to unlock value.

Preferred shares of Volkswagen lost 0.9 percent to 183.35 euros. Group board member for sales Christian Klingler said the economic climate remains difficult as Europe’s largest automaker posted a 5.1 percent increase in worldwide deliveries for the seven months through July. Deliveries in Western Europe, excluding Germany, fell 2.6 percent, while domestic sales dropped 4.1 percent, according to a statement.

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