German Stocks Snap Three-Day Fall on U.S. Rate Cut Speculation

By Stefanie Haxel

Dec. 16 (Bloomberg) -- German stocks gained for the first time in four days amid speculation the Federal Reserve will cut interest rates to a record low today to stimulate the economy.

SAP AG and BASF SE both rose at least 3.8 percent. The world’s largest maker of business-management software gets about a third of its sales in the Americas and the biggest chemical maker generates about a fifth of revenue in North America. Infineon Technologies AG gained 5.3 percent as Saxony’s premier Stanislaw Tillich said the German state is “ready to help” Infineon’s reeling Qimonda memory-chip unit.

The benchmark DAX Index climbed 67.03, or 1.4 percent, to 4,721.85 as of 2:58 p.m. in Frankfurt. DAX futures expiring on Dec. 19 rose 1 percent. The broader HDAX Index added 1.3 percent to 2,338.14.

The Fed will probably cut the key interest rate in half, to 0.5 percent, according to the median estimate in a Bloomberg News survey. U.S. President-elect Barack Obama said he is planning the most extensive public-works spending package since the 1950s.

“The exciting part today will be the Fed’s statement, the details on the unconventional measures they plan to take,” said Ansgar Krekeler, a trader at WGZ Bank in Dusseldorf. “Obama’s motto is spend, spend, spend. There may always be some positive surprises for stock markets. No one is looking at budget discipline at the moment.”

The central bank may also signal plans to channel credit to businesses and consumers by further enlarging its $2.26 trillion of assets. The FOMC, which began meeting yesterday, is expected to release its statement around 2:15 p.m. in Washington.

Copyright Lawsuit

SAP rose 4.2 percent to 25.675 euros, even after a U.S. court denied its bid to dismiss portions of Oracle Corp’s $1 billion copyright lawsuit accusing SAP of stealing software code.

Infineon Technologies AG rose 5.3 percent to 70 cents, a second day of gains. Saxony will lend 150 million euros ($205 million) to Qimonda, which will be matched by a capital increase from parent company Infineon, the state government said in an e- mailed statement today.

BASF rose 3.8 percent to 26.26 euros. The world’s largest chemical maker generated about a fifth of its revenue in North America last year, according to Bloomberg data.

Siemens AG advanced 3.5 percent to 48.79 euros. Europe’s largest engineering company will pay $1.6 billion to settle bribery probes in the U.S. and Germany. Fines “were less than the multibillion fines most were anticipating,” Nick Heymann, an analyst with Sterne Agee & Leach Inc. in New York, said in a note to investors.

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

Arcandor AG (ARO GY) advanced 7.4 percent to 2.63 euros. The German retailer that controls tour operator Thomas Cook Group Plc will buy Deutsche Telekom AG’s majority stake in customer loyalty program Happy Digits, Manager Magazin reported, without saying where it got the information.

Celesio AG (CLS1 GY), Europe’s biggest drug wholesaler, plunged 14 percent to 18.40 euros, the steepest intraday drop since at least January 1996. Laws restricting retailers from owning pharmacies in Germany are justified if the objective is to ensure an adequate supply of medicine, an adviser to the European Union’s highest court said today.

The European Court of Justice is weighing whether to compel Germany to remove rules limiting drugstore ownership, a decision that would make if possible for Celesio to build a pharmacy chain in the country.

HeidelbergCement AG (HEI GY) gained 4.3 percent to 31.52 euros, snapping a three-day drop. Germany’s billionaire Merck family, which controls the country’s biggest cement maker, yesterday said it has moved closer to an agreement with banks after receiving a proposal from its creditors on Dec. 12.

Separately, Exane BNP Paribas raised its recommendation on the stock to “neutral” from “underperform.”

Hypo Real Estate Holding AG (HRX GY) dropped 1.7 percent to 2.94 euros. Moody’s Investors Service cut the bank financial strength rating of the commercial-property lender bailed out by the government to E+ from C-, saying the outlook is negative.

IVG Immobilien AG (IVG GY) climbed 3.3 percent to 4.37 euros. Germany’s largest commercial-property company, sold an office building London to a sovereign wealth fund for 125 million pounds ($190 million).

Pfleiderer AG (PFD4 GY) dropped 2.4 percent to 6 euros. HSBC Holdings Plc lowered its recommendation on the laminate flooring maker with 22 factories on two continents to “neutral” from “overweight.”

Repower Systems AG (RPW GY) rallied 13 percent to 104.47 euros after Suzlon Energy Ltd., India’s biggest maker of wind- turbine generators, set a new payment schedule to buy Martifer SGPS SA’s 22.4 percent stake in the wind-turbine builder.

K+S AG (SDF GY) climbed 1.5 percent to 37.37 euros. Europe’s largest producer of potash used in fertilizers gained as Merrill Lynch & Co. upgraded competitors Potash Corp. of Saskatchewan Inc., Mosaic Co. and Terra Industries Inc. to “buy,” saying “fertilizer fundamentals are nearing a bottom.”

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