German Stocks Rally on Bank Rescue Plan; Commerzbank Advances

By Stefanie Haxel

Oct. 13 (Bloomberg) -- German stocks rebounded from the steepest weekly drop on record, led by banks, after European leaders agreed on measures to shore up financial markets.

Commerzbank AG, Germany's second-largest lender, rallied 18 percent and Hypo Real Estate Holding AG surged 37 percent. At a summit chaired by French President Nicolas Sarkozy, leaders of the 15 countries using the euro agreed to guarantee new bank debt and use taxpayer money to keep distressed lenders afloat.

The DAX Index increased 302.8, or 6.7 percent, to 4,847.11 as of 10:58 a.m. in Frankfurt. A close at this level would mark the steepest one-day gain since March 2003. DAX futures expiring in December soared 8.4 percent to 4,878.5. The HDAX Index of the country's 110 biggest companies increased 7.1 percent to 2,443.8.

``We see the rescue package positively as it should help to restore confidence among banks and to bolster weak banks' capital base,'' Equinet AG analyst Philipp Haessler in Frankfurt wrote in a note to clients today.

The DAX Index tumbled 22 percent last week on concern the deepening credit crisis will drag the global economy into recession. The measure is down more than 40 percent this year as credit losses and asset writedowns at financial firms worldwide topped $600 billion.

Commerzbank surged 1.735 euros, or 18 percent, to 11.44. Hypo Real Estate, the commercial-property lender that had to be bailed out by the government, gained 1.52 euros, or 37 percent, to 5.65. Deutsche Bank AG, the country's largest bank by assets, advanced 4.325 euros, or 14 percent, to 35.55.

Rescue Package

The German government's rescue package for the financial system may total about 400 billion euros ($540 billion), a leading lawmaker of Chancellor Angela Merkel's party said.


Reuters reported today the package is valued at 470 billion euros, citing a draft law.

The U.S. Federal Reserve said the world's largest central banks will offer financial institutions unlimited dollar funds in an effort to ease tensions in money markets.

Money-market rates may fall as a result as ``intense funding stresses'' at inter-bank markets ease, a team including Dominic Wilson, senior global economist at Goldman Sachs Group Inc. in New York, wrote in a note today.

Infineon Technologies AG, Europe's second-largest chipmaker, rose 42 cents, or 15 percent, to 3.17 euros. The company's memory-chip division Qimonda AG agreed to sell a 35.6 percent stake in Taiwan's Inotera Memories Inc. for $400 million in cash to U.S. competitor Micron Technology Inc.

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

Bayerische Motoren Werke AG (BMW GY) added 1.27 euros, or 6.5 percent, to 20.90, the steepest gain in three weeks. The world's largest maker of luxury cars stuck to its forecast for record car sales and a profit margin of at least 4 percent, Frankfurter Allgemeine Sonntagszeitung reported, citing Chief Executive Officer Norbert Reithofer.

Fielmann AG (FIE GY) increased 2.42 euros, or 5.7 percent, to 45.14. Exane BNP Paribas rated Europe's largest chain of optical stores ``outperform'' in new coverage and set its share- price estimate at 56 euros.

Fresenius Medical Care AG (FME GY) climbed 2.25 euros, or 7.2 percent, to 33.67 as UBS AG raised its recommendation for the world's biggest provider of kidney dialysis to ``buy'' from ``neutral.''

ProSiebenSat.1 Media AG (PSM GY) rallied 69 cents, or 22 percent, to 3.90 euros, on course for the biggest gain since March 2002. The country's largest private broadcaster purchased a 67.6 percent stake in online news company Webnews.de to expand its Internet business.

TUI AG (TUI1 GY) climbed 1.23 euros, or 14 percent, to 9.995, the steepest advance in more than five years. The owner of Europe's largest travel company agreed to sell its Hapag-Lloyd shipping unit for more than some analysts had estimated.

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