German Stocks Climb for Second Day as Adidas, Steelmakers Gain

By Christiane Lenzner

Sept. 16 (Bloomberg) -- German stocks gained for a second day, sending the benchmark DAX Index to an 11-month high, as Morgan Stanley recommended shares of Adidas AG and steelmakers climbed with metal prices.

Adidas, the world’s second-largest sporting-goods maker, jumped 6.5 percent. ThyssenKrupp AG and Salzgitter AG rose at least 1.7 percent. Commerzbank AG, Germany’s second-biggest bank, added 4.1 percent as Handelsblatt reported the lender’s sale of Kleinwort Benson and Dresdner Bauspar AG has attracted strong interest.

The DAX Index climbed 0.9 percent to 5,678.44 as of 12:58 p.m. in Frankfurt, the highest level since October. The measure has rebounded 55 percent since March 6 as companies reported better-than-estimated earnings and economic data signaled the global recession is nearing an end. The broader HDAX Index increased 0.9 percent today.

“If you look at micro and macro fundamentals, they look good,” Nathalie Pelras, a fund manager at Richelieu Finance in Paris, said in an interview. “There is no fundamental reason for the market to collapse.”

U.S. reports today may show the Obama administration’s “cash-for-clunkers” plan helped to boost production and restrain prices, economists said. Industrial output probably climbed 0.6 percent last month as automakers cranked up assembly lines, according to the median of 75 projections in a Bloomberg News survey. The cost of living likely rose 0.3 percent, the survey showed, reflecting a jump in fuel costs that was offset in part by the government’s incentive to trade in older cars.

‘Overweight’

Adidas rallied 6.5 percent to 35.88 euros as Morgan Stanley initiated coverage of the stock with an “overweight” recommendation and a price estimate of 44.80 euros. The brokerage also rated Puma AG “overweight.” Europe’s second- largest sporting-goods maker jumped 3.1 percent to 226.90 euros.

“We believe these sporting goods brands are in a strong position to outperform peers,” Morgan Stanley analyst Louise Singlehurst wrote in a report to clients. “Sporting goods present one of the most exciting exposures to the high-growth Chinese consumer market.”

ThyssenKrupp and Salzgitter, Germany’s largest steelmakers, rose 2 percent to 24.43 euros and 1.7 percent to 71.50 euros, respectively. Copper, lead and nickel all climbed on the London Metal Exchange, lifting basic-resource shares across Europe.

K+S AG, Europe’s biggest maker of potash used in fertilizers, soared 4.3 percent to 39.39 euros, set for the highest close this month.

Commerzbank, Daimler

Commerzbank advanced 4 percent to 8.83 euros. Handelsblatt also reported Commerzbank’s eastern European operations will post losses this year, citing management board member Achim Kassow, who didn’t say whether they may return to profitability in 2010.

Daimler AG, the maker of Mercedes Benz cars, increased 3.3 percent to 34.20 euros, the first gain in three days.

Common shares of Volkswagen AG dropped for a third day, losing 1.2 percent to 120.93 euros. Europe’s largest carmaker expects the ordinary shares to be removed from the DAX after Qatar Holding LLC exercises its options to buy the stock, reducing the so-called free-float. Preferred shares climbed 2.6 percent to 73.36 euros, set for the highest close since October.

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

Arcandor AG (ARO GY) rallied 23 percent to 49 cents, the highest price since July. The stock jumped 38 percent yesterday after the insolvent German retailer said it no longer holds any shares in Thomas Cook Group Plc.

Aixtron AG (AIXA GY) climbed 2 percent to 15.55 euros after Goldman Sachs Group Inc. lifted its share-price estimate for the maker of specialized equipment used to produce LED screens to 18 euros from 13 euros.

Bilfinger Berger AG (GBF GY) surged 4.5 percent to 48.22 euros, snapping a three-day drop, after Germany’s second-biggest builder was raised to “buy” from “sell” at Goldman Sachs.

Fuchs Petrolub AG (FPE3 GY) rose 2.2 percent to 52.29 euros as the country’s largest maker of lubricants was upgraded to “buy” from “add” at WestLB AG.

Gildemeister AG (GIL GY) jumped 4 percent to 9.46 euros after HSBC Holdings Plc raised its recommendation for the German machine-tool maker founded in 1870 to “overweight” from “neutral.”

Infineon Technologies AG (IFX GY) advanced 1.4 percent to 3.94 euros. Goldman Sachs increased its share-price projection for Europe’s second-largest maker of semiconductors to 5 euros from 4 euros.

TUI AG (TUI1 GY) dropped 2 percent to 7.01 euros. The stock was cut to “reduce” from “hold” at Equinet AG, citing a report in Financial Times Deutschland that Hapag-Lloyd AG may have difficulties to get European Union approval for the state aid it applied for.

“It is clearly negative that the refinancing of Hapag- Lloyd is at risk,” Equinet wrote in a note to clients. TUI is the largest shareholder in the Hapag-Lloyd container-line.

To contact the reporter on this story: Christiane Lenzner in Frankfurt at clenzner@bloomberg.net.