DAX Index Is Little Changed; Hochtief Rises, Deutsche Bank Drops
German stocks closed little changed as Federal Reserve Chairman Ben S. Bernanke said the U.S. central bank may opt for a third round of bond buying if unemployment fails to decrease.
Hochtief AG climbed 4.3 percent after it announced that a Qatari company will become a major shareholder as part of a capital increase. ThyssenKrupp added 3.2 percent after Citigroup Inc. increased its price forecast on the stock. Deutsche Bank AG dropped 1.6 percent after BofA Merrill Lynch Global Research added the stock to its “least preferred list” of banks.
The DAX Index gained 0.1 percent to 6,954.38 at the 5:30 p.m. close in Frankfurt, having swung between gains and losses about 20 times today as 16 stocks fell and 13 rose. The gauge advanced 1.4 percent last week as the European Central Bank bought Portuguese and Irish government bonds and President Jean- Claude Trichet delayed the bank’s withdrawal of emergency liquidity. The broader HDAX Index added 0.2 percent.
“In the U.S., we still have really weak employment data and very sluggish wage growth, which coupled with rising commodity prices is a problem for the consumer,” said Matthias Joerss, a Frankfurt-based strategist at Macquarie Group Ltd., in an interview.
Fed Chairman Bernanke said that the U.S. economy is failing to grow at a pace that will reduce unemployment and that policy makers may expand their program of bond purchases beyond the $600 billion announced last month to spur growth.
The purchase of more bonds than planned is “certainly possible,” Bernanke said in an interview broadcast yesterday by CBS Corp.’s “60 Minutes” program. “It depends on the efficacy of the program” and the outlook for inflation and the economy.
European Bailout Fund
European finance ministers gathered in Brussels today for their monthly meeting after Belgium argued that the region could expand its 750 billion-euro ($995.5 billion) bailout fund to fight the sovereign-debt crisis.
Belgian Finance Minister Didier Reynders told reporters on Dec. 4 that ministers may increase the fund when they introduce a permanent facility to replace the current temporary one, which expires in 2013. German Chancellor Angela Merkel rebuffed Reynders’s plea to expand the fund.
“Right now, I see no need to expand the fund,” Merkel told reporters in Berlin today. She said EU treaties bar joint bond sales, which might force up Germany’s borrowing costs, the lowest in Europe.
Hochtief, ThyssenKrupp Climb
Hochtief soared 4.3 percent to 62.68 euros, the largest advance in 11 weeks. The German builder said Qatar Holding LLC will own almost 9.1 percent of the company after it completes its planned capital increase. Hochtief wants to stop a takeover bid from Spanish competitor Actividades de Construccion y Servicios SA, which is Hochtief’s biggest shareholder.
Hochtief will increase its capital by about 10 percent by issuing stock at 57.114 euros a share, according to a statement today. Qatar will invest almost 400 million euros to “strengthen the financial position and provide latitude for the announced further growth,” Hochtief said.
ThyssenKrupp rose 3.2 percent to 31.04 euros as Citigroup lifted its price estimate on Germany’s largest steelmaker to 40 euros from 30 euros.
BASF SE, the world’s biggest chemical company, added 1.4 percent to 60.02 euros. Goldman Sachs lifted its stance on chemical shares to “neutral” from “cautious.”
Deutsche Bank, Postbank
Deutsche Bank, Germany’s biggest bank, slid 1.6 percent to 38.28 euros, the first decline in four days. BofA Merrill Lynch said in a report today that the fourth quarter “has been disappointing for the entire industry” and it doesn’t see Deutsche Bank’s shares “performing over the next month.”
Continental AG, Europe’s second-largest tiremaker, rose 2.1 percent to 66.84 euros. Germany will soon sell out of winter tires after new legislation made the tires mandatory from last weekend, Die Welt said, citing Peter Huelzer of the BRV tire trade association.
Deutsche Postbank AG sank 9 percent to 20.11 euros as the retail lender’s shares will leave Germany’s MDAX benchmark index for medium-sized companies on Dec. 8 after its proportion of shares trading freely dropped below 10 percent.
EnBW Energie Baden-Wuerttemberg AG jumped 17 percent to 41.04 euros, the biggest jump since 1999. Electricite de France SA, Europe’s biggest power generator, agreed to sell its 4.7 billion-euro, 45 percent stake in EnBW to cut debt.
Suedzucker, Krones Climb
Suedzucker AG surged 8.5 percent to 18.29 euros as Deutsche Bank raised its recommendation on the world’s largest sugar refiner to “buy” from “hold.”
“Suedzucker is currently in a sweet spot,” London-based analysts Harold Thompson and Jamie Isenwater wrote in a report today. “Tight world sugar supplies are making its sugar operations more profitable than we expected and the benefits of past investments in the European bioethanol industry are now delivering substantial profits.”
Krones AG jumped 4.1 percent to 45.18 euros, the highest price since September 2008. The world’s biggest maker of bottling and packaging equipment forecast “double-digit order growth” in the fourth quarter, co-Chief Executive Officer Hans- Juergen Thaus said in an interview with Euro am Sonntag.
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