German stocks pare worst month in nine years on fed speculation
German stocks advanced, with the benchmark DAX Index trimming its biggest monthly drop in almost nine years, as unemployment fell and Federal Reserve minutes showed some policy makers wanted to add to stimulus measures.
Allianz SE gained 4 percent as Goldman Sachs Group Inc. recommended buying the shares of Europe’s biggest insurer by market value. ThyssenKrupp AG and Salzgitter AG, Germany’s largest steelmakers, rallied with metal prices. Deutsche Lufthansa AG jumped 4 percent as the airline increased fares.
The DAX rose 1.3 percent to 5,718.1 as of 2:35 p.m. in Frankfurt. The gauge has still tumbled 20 percent in August, its biggest monthly retreat since September 2002, as European and U.S. economic reports that trailed forecasts added to concern that the global economic recovery is at risk. The broader HDAX gained 1.4 percent today.
“There’s hope politicians will put in place measures to help the economy and the Fed will do the same,” said Markus Huber, head of German sales trading at ETX Capital in London. “The German data are certainly a surprise and should support German economic growth in the third quarter.”
German unemployment declined in August for a 26th straight month. The number of people out of work fell a seasonally adjusted 8,000 to 2.95 million in August and the jobless rate held at 7 percent, the lowest since records for a reunified Germany began in 1991, the Nuremberg-based Federal Labor Agency said today.
Retail Sales
A separate report showed German retail sales unexpectedly held steady in July after surging the most in more than three years the previous month. Sales, adjusted for inflation and seasonal swings, were unchanged from June, when they jumped 4.5 percent, the Federal Statistics Office in Wiesbaden said. Economists had forecast a 1.5 percent decline, the median of 20 estimates in a Bloomberg survey showed.
U.S. Federal Reserve policy makers debated ways to invigorate the recovery and hiring this month, potentially laying the groundwork for fresh action at their next gathering in September, according to minutes of their latest meeting released late yesterday. A few members of the Federal Open Market Committee favored a “more substantial move” at the Aug. 9 meeting beyond the pledge adopted by the panel to hold rates at record lows for the next two years.
Data from ADP Employer Services showed companies added 91,000 workers this month, two days before the Labor Department’s monthly jobs report, which is forecast to show payrolls climbed by 70,000 in August after an increase of 117,000 in July.
Allianz Advances
Allianz advanced 4 percent to 70.85 euros as Goldman Sachs upgraded the stock to “buy” from “neutral.”
“Allianz has been sold off on what we see as excessive concerns over the sustainability of life earnings owing to the fall in German 10-year yields,” Goldman Sachs analysts, including Vinit Malhotra and Kent Choi, wrote in a report. “The Allianz German life spread is secure given the investment mix. Underlying profitability in non-life businesses is improving, both in mature and faster-growth markets.”
ThyssenKrupp climbed 2.5 percent to 23.01 euros, while Salzgitter gained 3.2 percent to 42.65 euros as aluminum, copper, nickel, tin and zinc all rallied on the London Metal Exchange.
Lufthansa, Europe’s second-biggest airline, advanced 4 percent to 11.60 euros. Lufthansa will increase business-class fares and also lift inter-continental ticket prices by 100 euros ($144) for first-class travel and by as much as 40 euros in coach, spokesman Boris Ogursky said today by telephone. Increases on U.S. routes will be lower, he said.
Continental Climbs
Schaeffler Group, the roller-bearing maker that controls Continental AG, said first-half profit rose 20 percent as higher demand for carmakers boosted sales. Continental shares surged 2.8 percent to 50.37 euros.
ElringKlinger AG soared 4.7 percent to 17.17 euros, the highest price in two weeks. The automobile-parts maker expects a one-time operating profit gain of 22 million euros this year from the sale of its Ludwigsburg industrial park after signing an agreement yesterday, it said.
TUI AG rose 5 percent to 4.81 euros. The company is planning to consolidate its online businesses and move the unit to Berlin from Hanover, Reuters reported, citing Germany unit head Volker Boettcher.
The German travel company is trying to catch up with online rivals such as Expedia Inc. and Opodo as only 15 percent of TUI’s customers book online compared with an industry average of 24 percent, Reuters said.
Bijou Brigitte Modische Accessoires AG dropped 3.5 percent to 62.90 euros as the retailer said first-half net income fell to 18.8 million euros from 24.5 million euros in the year-ago quarter.