German Stocks Gain as Hannover Re, Henkel Advance; BASF Drops

By Julie Cruz

Aug. 6 (Bloomberg) -- German stocks rebounded from two days of losses after earnings at Hannover Re doubled and analysts raised their recommendations for Henkel AG.

Hannover Re jumped 4.3 percent as Germany’s second-biggest reinsurer reported second-quarter profit of 202.9 million euros ($292.3 million), beating analysts’ estimates. Henkel rose 3.8 percent after it was upgraded to “hold” at Societe Generale SA and Jefferies Group Inc. BASF SE declined 1 percent as UBS AG cut its recommendation on the shares.

The benchmark DAX Index added 0.5 percent to 5,380.53 as of 11:08 a.m. in Frankfurt, a second advance this week. The broader HDAX Index also climbed 0.5 percent. German companies that have reported quarterly earnings so far beat projections by an average of 13 percent, while net income declined 64 percent, according to Bloomberg data.

Hannover Re rallied 4.3 percent to 29.17 euros. The reinsurer expects to beat its own profit forecast of about 600 million euros or at least 5 euros per share in 2009 if capital markets remain unchanged at current levels, Chief Financial Officer Roland Vogel said in a telephone interview today.

Henkel, the German maker of Loctite glues and Persil detergent, climbed 3.8 percent to 27.34 euros. “We have decided to upgrade Henkel from sell to hold following the release of a solid set of sales and earnings figures in the second quarter,” Emmanuel Bruley des Varannes, an analyst at Societe Generale, wrote in a report today.

Jefferies lifted its recommendation from “underperform,” while Goldman Sachs Group Inc. raised its share-price estimate to 25.80 euros from 24.60 euros.

Steelmakers

ThyssenKrupp AG, Germany’s largest steelmaker, climbed 2 percent to 23.13 euros. Bank of America Corp. lifted its price projection to 30 euros a share from 26 euros. Smaller competitor Salzgitter AG climbed 1.4 percent to 72.09 euros.

Siemens AG, Europe’s largest engineering company, increased 1.4 percent to 57.36 euros. Deutsche Bank AG raised its price estimate on the stock to 70 euros from 60 euros.

BASF declined 1 percent to 35.26 euros. The world’s biggest chemical company was cut to “neutral” from “buy” at UBS. Volkswagen AG, Europe’s largest carmaker, tumbled 4.7 percent to 223.44 euros.

The European Central Bank will leave interest rates at a record low as it tries to get credit flowing again to strengthen an economy that may return to growth this quarter, economists said. ECB officials meeting in Frankfurt today will keep the benchmark rate at 1 percent, according to all 52 economists in a Bloomberg News survey.

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

Fuchs Petrolub AG (FPE3 GY) jumped 7.2 percent to 47.69 euros, the biggest intraday advance since May. WestLB AG raised its share-price estimate for Germany’s largest maker of lubricants 19 percent to 50 euros, citing “very strong” second-quarter results.

ProSiebenSat.1 Media AG (PSM GY) dropped for the first time in seven days, losing 4.1 percent to 5.15 euros. Germany’s biggest private broadcaster said second-quarter net income dropped to 45.5 million euros from 59.5 million euros. The company said it can’t make a forecast for 2009 though it does expect to beat its goal of 100 million euros in cost savings.

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net.