German Stocks Advance as Euro-Area Confidence ImprovesJonathan Morgan and Alexis Xydias
German stocks advanced as a report showed euro-area consumer confidence increased more in August than estimated, outweighing worse-than-forecast U.S. home sales.
Commerzbank AG gained for a third day on speculation the German government may sell its 17 percent stake in the lender. GSW Immobilien AG slipped 0.9 percent after HSBC Holdings Plc downgraded its rating on Berlin’s largest residential landlord.
The DAX Index added 0.2 percent to 8,416.99 at the close of trading in Frankfurt, for a weekly gain of 0.3 percent. The benchmark index has traded within a 2.3 percent range since July 17 as volumes fell and investors awaited more economic reports to assess the strength of the economy. The broader HDAX Index rose 0.3 percent today.
“We are buyers of European equities because they were oversold,” said London-based Nick Lyster, who helps oversee $292 billion as chief executive officer in Europe for Principal Global Investors. “While we are not expecting any fireworks, the economy in Europe is a lot better than it was.”
The DAX has rallied 9.4 percent from its low on June 24 as the European Central Bank said that interest rates will remain low for an extended period and manufacturing and gross domestic product data in the country beat estimates.
The volume of shares changing hands in DAX-listed companies was 24 percent lower than the average of the past 30 days, according to data compiled by Bloomberg.
Euro-area consumer confidence increased more in August than economists estimated. An index of household confidence improved for a ninth month to minus 15.6, the highest level since July 2011, from minus 17.4 in the previous month, the European Commission said in a preliminary report. Economists had forecast an increase to minus 16.5, according to the median of 26 estimates in a Bloomberg News survey.
Purchases of new U.S. homes plunged in July by the most in more than three years and previous months were revised down. Sales of newly built homes declined 13.4 percent to a 394,000 annualized pace, the weakest since October, following a 455,000 rate in the prior period that was lower than previously estimated, Commerce Department figures showed today in Washington. The median estimate of 74 economists surveyed by Bloomberg called for a decrease to 487,000.
German gross domestic product climbed 0.7 percent in the second quarter, the Federal Statistics Office in Wiesbaden said today, confirming an Aug. 14 estimate. The economy grew 0.5 percent from a year earlier when adjusted for working days.
Commerzbank advanced 2.6 percent to 8.83 euros as analysts said the German government may be preparing to dispose of its stake in the country’s second-largest lender.
“We think that it is true that the German government is considering various options to sell its Commerzbank stake,” Equinet AG wrote in a report today. “In our view, CBK’s core bank would be clearly interesting for foreign banks that are interested in entering the German market.”
Lanxess AG rose 1.1 percent to 48.94 euros and BASF AG added 1.1 percent to 69.03 euros. A gauge of chemical-related companies advanced on the Stoxx Europe 600 Index.
GSW slipped 0.9 percent to 33.13 euros. HSBC cut the shares to underweight, similar to a sell rating, from neutral, saying they are worth 31.8 euros apiece. GSW surged to the highest price since its 2011 initial public offering on Aug. 20 after Deutsche Wohnen AG made an all-share bid for the company that would create the second-largest owner of German homes.