German Stocks Snap Seven-Day Loss; Deutsche Bank, Infineon Gain

By Stefanie Haxel

Jan. 16 (Bloomberg) -- German stocks advanced for the first time in eight days as investors speculated the U.S. government’s $20 billion investment in Bank of America Corp. will help stabilize the financial system.

Allianz SE, Germany’s largest insurer, and Deutsche Postbank AG, rose at least 3 percent. Infineon Technologies AG, Europe’s second-largest maker of semiconductors, advanced 6.6 percent as Intel Corp. of the U.S. said profitability may rebound after the first quarter, when customers finish working through excess supplies.

The benchmark DAX Index added 2.5 percent to 4,443.64 as of 12:28 p.m. in Frankfurt, trimming the weekly decline to 7.1 percent. DAX futures expiring in March increased 2.6 percent. The broader HDAX advanced 2.4 percent.

“The aid for Bank of America is reassuring the market,” said Robert Halver, head of research at Baader Bank in Frankfurt. “Banks are key for the global recovery. The move shows governments will continue to provide support if necessary.”

The U.S. government also guaranteed $118 billion of Bank of America’s assets to support its acquisition of Merrill Lynch & Co. The emergency lifeline is “part of its commitment to support financial-market stability,” the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. said.

Stocks pared some gains after Citigroup Inc. posted a $8.29 billion fourth-quarter loss and Bank of America cut its quarterly dividend to 1 cent a share from 32 cents.

The DAX Index has tumbled 45 percent since the beginning of last year as credit losses and writedowns topped $1 trillion in the worst financial crisis since the Great Depression and the U.S., Japan and Europe fell into simultaneous recessions.

Banks Climb

Allianz increased 4.4 percent to 66.67 euros. Munich Re, the world’s biggest reinsurer, added 5.7 percent to 112.79 euros. Postbank, the country’s largest consumer bank by clients, gained 3.1 percent to 9.93 euros.

Infineon advanced 6.6 percent to 89.5 cents. Gross margin at Intel, or the percentage of sales remaining after taking out production costs, was 53 percent last quarter, the world’s biggest chipmaker said.

Deutsche Lufthansa AG rose 3.5 percent to 10.73 euros, a two-week high. Europe’s second-largest airline cut its fuel cost estimate for this year to 3.7 billion euros ($4.9 billion) from 5.6 billion euros, Dow Jones reported, citing Helmut Fredrich, vice president for corporate fuel management.

Jet-fuel prices in northwest Europe have dropped 66 percent from a high reached in July, Bloomberg data show.

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

HeidelbergCement AG (HEI GY), Germany’s largest cement maker, surged 7.4 percent to 30.91 euros. Goldman Sachs Group Inc. has expressed interest in a stake of the asset of deceased billionaire Adolf Merckle, in a potential deal with U.S. buyout firm TPG, the Wall Street Journal reported, citing people familiar with the situation.

Merck KGaA (MRK GY), the world’s largest maker of liquid crystals used in flat-screen televisions, dropped 2.6 percent to 64.08 euros. South Korea’s LG Display Co., the world’s second- largest maker of liquid-crystal displays, reported its first loss in seven quarters after the global recession eroded electronics demand and the company was fined for price-fixing.

Norddeutsche Affinerie AG (NDA GY), Europe’s largest copper refiner, rallied 6.1 percent to 25.16 euros. Copper rose in London as China’s biggest inventory slide in almost a year signaled declining supplies.

ProSiebenSat.1 Media AG (PSM GY) surged 7.7 percent to 1.68 euros. Germany’s biggest private broadcaster aims to recover advertising market share for its German free-to-air business, it said in a presentation for investors.

SGL Group (SGL GY) rallied 5.7 percent to 17.73 euros, rising for the first time in nine days. Goldman lifted its recommendation for the world’s largest maker of carbon and graphite products to “neutral” from “sell.”

TUI1 GY (TUI1 GY) plunged 6.1 percent to 6.78 euros. The Hapag-Lloyd shipping line of Europe’s largest tour operator may be postponed after Royal Bank of Scotland Group Plc withdrew from the group supporting the transaction, online news service Lloyd’s List reported.

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