German Stocks Rise to 30-Month High; Bayer, Porsche Shares Gain
German stocks rose to a 30-month high after President Barack Obama agreed to extend tax cuts, the U.S. government sold its remaining Citigroup Inc. holding and copper rose to its highest price on record.
Bayer AG, Europe’s biggest drug and chemical maker, rose 0.9 percent after Credit Suisse Group AG upgraded its recommendation on the shares, while Porsche SE climbed 4.4 percent after Barclays Plc raised its recommendation for the carmaker. Hochtief AG jumped 3.4 percent after a report Actividades de Construccion y Servicios SA will continue with its bid.
The DAX Index gained 0.7 percent to 7,001.91 at the 5:30 p.m. close of trading in Frankfurt, the highest since June 2008. The gauge advanced 0.1 percent yesterday as Federal Reserve Chairman Ben S. Bernanke said the U.S. central bank may expand its bond-purchase program beyond the $600 billion announced last month. The broader HDAX Index also added 0.7 percent today.
“The U.S. government is placing the last bit of Citigroup they own and the shares are likely to be snapped up,” said Lex van Dam, fund manager at London-based Hampstead Capital LLP, which oversees $500 million. “That, combined with the Obama tax cuts and the continued rally in the commodity space, means many bears are throwing in the towel today and jumping in.”
German factory orders rose in October as domestic demand picked up, another sign the country’s economic recovery is broadening.
Orders, adjusted for seasonal swings and inflation, increased 1.6 from September, when they fell 4 percent, the Economy Ministry in Berlin said today. From a year earlier, orders climbed 17.9 percent when adjusted for working days.
President Obama said he will agree to keep Bush-era tax cuts for high-income taxpayers in exchange for extending federal unemployment insurance and cutting the payroll tax by $120 billion for one year.
Obama said he will accept lower rates on high earners’ income, dividends, capital gains and multi million-dollar estates for the next two years to break the stalemate over extending the Bush administration’s tax cuts for middle-class taxpayers before Congress adjourns.
The U.S. Treasury Department sold its remaining stock in Citigroup Inc. for $10.5 billion, bringing the country’s third- biggest bank a step closer to independence from the government following a $45 billion bailout in 2008.
European finance ministers ruled out immediate aid for Portugal and Spain or an increase in the 750 billion-euro ($999 billion) crisis fund, counting on European Central Bank bond purchases to calm debt-spooked markets.
A week after handing Ireland an 85 billion-euro lifeline, the finance chiefs voiced confidence that Spain and Portugal will tame their budget deficits and said the existing credit line is enough to defend them in an emergency.
Copper rose to a record in London as demand will outpace supply by 367,500 tons next year, enough for wires, pipes and appliances in about 1.8 million U.S. homes, according to the median forecast of 12 analysts surveyed by Bloomberg.
Bayer climbed 0.9 percent to 58.12 euros, its third rise. The drugmaker was raised to “outperform” from “neutral” at Credit Suisse.
Porsche jumped 4.4 percent to 68.57 euros, the highest price in over two years. The carmaker was raised to “overweight” from “equalweight” at Barclays.
Hochtief jumped 3.4 percent to 64.82 euros, the highest since Oct. 27. Actividades de Construccion y Servicios SA will continue with its bid for Hochtief AG even after the German construction company carries out a capital increase and sells 9.1 percent of its shares to Qatar Holding LLC, Expansion reported, without citing anyone.
The capital increase will dilute the stake in Hochtief owned by ACS to about 27 percent, making the goal of raising the stake above 30 percent more expensive, the newspaper said.
Siemens AG rose 1.7 percent to 91.59 euros, its second gain. The engineering company has received authorization from Germany’s Federal Financial Supervisory Authority (BaFin) to engage in banking operations. Siemens Bank GmbH will support sales in the company’s three operating sectors, the company said in an e-mailed statement today.
Henkel slipped 2.9 percent to 46.86 euros, erasing two days of gains. Morgan Stanley cut its recommendation to “equalweight,” saying it “would look for a more attractive entry point before adding to existing positions.”
Air Berlin Plc increased 3.1 percent to 3.92 euros, paring two days of losses. Germany’s second-biggest airline said passenger traffic rose 8.4 percent to 2.5 million in November, while the load factor rose 3.2 points to 74.9 percent.
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