German Stocks Advance, Led by Deutsche Bank; Utilities Climb

By Henrietta Rumberger and Stefanie Haxel

Aug. 7 (Bloomberg) -- German stocks rose for a third day as better-than-estimated earnings from Barclays Plc lifted bank shares and utilities climbed on Veolia Environnement SA's plan to sell assets.

Deutsche Bank AG and Commerzbank AG led the advance. E.ON AG and RWE AG, the country's biggest utilities, also increased. Insurance companies limited gains after Allianz SE scrapped its profit growth forecast and Hannover Re said second-quarter earnings declined.

The benchmark DAX Index added 29.05, or 0.4 percent, to 6,590.44 as of 2:52 p.m. in Frankfurt. DAX futures expiring in September rose 22.5, or 0.3 percent, to 6,625. The HDAX Index of the country's 110 biggest companies increased 0.5 percent to 3,348.1.

``Barclays gives the banking industry a positive impulse,'' said Robert Halver head of research at Baader Bank in Frankfurt.

European Central Bank President Jean-Claude Trichet said today the bank remains focused on bringing down inflation even as economic growth slows. The ECB kept its benchmark interest rate on hold at 4.25 percent.

Stocks pared earlier advances after German industrial production increased 0.2 percent in June, less than the 0.8 economist had forecast.

Deutsche Bank, Germany's largest bank, climbed 70.5 cents, or 1.1 percent, to 62.715 euros. Commerzbank, the second-biggest, rallied 56.5 cents, or 2.6 percent, to 22.19 euros.

Barclays, the U.K.'s third-largest bank, reported first-half net income of 1.72 billion pounds ($3.4 billion), beating the 1.5 billion-pound average estimate of 11 analysts surveyed by Bloomberg.

Utilities

E.ON, Germany's biggest utility, gained 63 cents, or 1.6 percent, to 40.59 euros. RWE, the second-largest, increased 96 cents, or 1.3 percent, to 76.64 euros.

Veolia, the world's biggest water company, rallied 8.2 percent in Paris after saying it will implement a ``robust'' plan to cut costs by 400 million euros ($619 million) and sell 1.5 billion euros of assets by the end of next year.

Allianz slipped 78 cents, or 0.7 percent, to 112.20 euros. Europe's biggest insurer scrapped its earnings growth forecast after losses at its Dresdner Bank unit led to a 29 percent drop in second-quarter profit. Allianz expects financial markets to remain difficult through 2009, meaning its target for 10 percent compound annual growth in operating earnings ``cannot be maintained,'' the insurer said.

`Hurts the Market'

``The thing with Allianz profit warning is, that although it did not come as a very big surprise, it still hurts the market when it actually is announced,'' Oliver Opgen-Rhein, a trader at HSBC Trinkaus & Burkhardt in Dusseldorf, said in a Bloomberg Television interview.

Hannover Re, Germany's second-biggest reinsurer, sank 1.03 euros, or 3.3 percent, to 30.29. Profit declined 40 percent to 100.8 million euros as falling stock markets weighed on income from investments. That missed the 142 million-euro median estimate of nine analysts surveyed by Bloomberg.

Munich Re, the world's biggest reinsurer, slipped 1.34 euros, or 1.2 percent, to 111.59.

The following stocks also rose or fell in German markets. Symbols are in parentheses.

10tacle Studios AG (T1C GY) tumbled 69 cents, or 73 percent, to 26 cents. The maker of computer and video games filed for insolvency, according to a regulatory statement last night.

Aixtron AG (AIX GY) surged 39 cents, or 6.6 percent, to 6.31 euros. The equipment maker for the chip industry said second- quarter profit jumped 94 percent to 7.4 million euros on demand for gear to produce light-emitting diodes. That compares with a 6.3 million-euro median estimate of seven analysts Bloomberg News surveyed by phone and e-mail.

Altana AG (ALT GY) slipped 35 cents, or 3.4 percent, to 10.05 euros. The world's largest maker of additives for coatings and plastics parts said second-quarter profit rose 2.4 percent to 33.8 million euros after it raised selling prices for specialty chemicals including pearlescent pigments used in cosmetics. Analysts surveyed by Bloomberg News had predicted net income of 34.4 million euros.

Bayer AG (BAY GY) rose 69 cents, or 1.2 percent, to 56.21 euros. Germany's largest drugmaker bought Nycomed Holding AS's experimental cancer medicines for as much as 52 million euros.

Biotest AG (BIO3 GY) added 2.28 euros, or 3.6 percent, to 65 after the biotechnology company that makes compounds from human blood plasma said it's expanding capacity for obtaining blood plasma.

Demag Cranes AG (D9C GY) gained 25 cents, or 0.7 percent, to 34.46 euros. The world's largest maker of mobile harbor cranes said third-quarter profit doubled to 24.8 million euros on sales of cranes and industrial services.

Deutsche Lufthansa AG (LHA GY) fell 39.5 cents, or 2.5 percent, to 15.235 euros. Europe's second-largest airline said it's grounding about 360 flights today as pilots at the CityLine regional unit strike over pay.

Separately, oil rose for the first time in four days after Turkey said a pipeline carrying crude to the Mediterranean from Azerbaijan may remain shut for two weeks following an explosion on Aug. 5.

Draegerwerk AG (DRW3 GY) climbed for a fourth day, rallying 1.12 euros, or 2.8 percent, to 40.89. The maker of the Infinity ACS patient-monitoring system said second-quarter profit rose 16 percent to 18.2 million euros as sales increased in Asia and its home market of Germany.

ElringKlinger AG (ZIL2 GY) decreased 41 cents, or 2.3 percent, to 17.59 euros. The supplier of car parts said second- quarter profit fell 8.6 percent to 19.2 million euros from a year earlier when extraordinary income swelled earnings.

Fraport AG (FRA GY) gained for a fourth day, climbing 3.75 euros, or 9 percent, to 45.48. The owner of Frankfurt airport said second-quarter profit rose 3.3 percent to 68.5 million euros, beating analyst estimates, as it bought Peru's biggest terminal and cut costs buy selling a security division.

Gagfah SA (GFJ GY) slipped 24 cents, or 2.4 percent, to 9.66 euros, the first decline in three days. Germany's largest publicly traded residential landlord said second-quarter profit fell to 31.5 million euros from 559.7 million euros as the value of its apartments dropped.

Puma AG (PUM GY) climbed 3.78 euros, or 1.7 percent, to 227.10. Europe's second-largest sporting-goods maker posted a profit of 45.6 million euros after the company spent more promoting its shoes and apparel before the Olympic Games. That beat the 41.1 million-euro average of four analysts' estimates.

To contact the reporter on this story: Henrietta Rumberger in Frankfurt at hrumberger@bloomberg.net; Stefanie Haxel in Frankfurt at shaxel@bloomberg.net