German Financial Stocks Advance, Led by Allianz and Commerzbank

German financial stocks rose, led by Allianz AG, Europe's largest insurer, and Commerzbank AG, the country's second-largest lender, as investors speculated earnings growth in the industry will accelerate.

It ``should be another good year for financial stocks,'' said Manuel Martin, an equity strategist at WGZ Bank in Frankfurt. ``Banks and insurers offer potential for further efficiency increases. Banks should profit from commissions from mergers and acquisitions.''

The DAX Index added 10.19, or 0.2 percent, to 6691.32. DAX futures expiring in March gained 13.5, or 0.2 percent, to 6742.5 as of 5:47 p.m. in Frankfurt. The HDAX Index of the country's 110 biggest companies increased 7.01, or 0.2 percent, to 3454.33.

The TecDAX index of 30 technology companies rose 18.33, or 2.4 percent, to 777.4, the highest close since the measure was introduced in March 2003.

ThyssenKrupp AG and Salzgitter AG limited the advance after Credit Suisse Group cut its recommendation on the steel industry.

Stocks extended gains after a report showed manufacturing in the U.S. unexpectedly expanded in December after contracting for the first time in more than three years during the prior month. The U.S. is Europe's biggest trading partner.

The Institute for Supply Management's manufacturing index for December rose to 51.4 from 49.5 in November. A reading above 50 signals expansion. Economists surveyed by Bloomberg expected the total manufacturing index to rise to 50.

`Soft Landing'

``Today's data supports the `soft landing' scenario the stock markets have been betting on,'' said Juergen Lukasser, who helps manage $13 billion as head of equities at Constantia Privatbank AG in Vienna. We are ``not on the way to recession.''

Allianz advanced 1.02 euro, or 0.7 percent, to 157.52 euros. Commerzbank gained 36 cents, or 1.2 percent, to 29.87 euros. German banks will likely post further profit gains in 2007 thanks to the country's economic growth, Commerzbank Chief Executive Officer Klaus-Peter Mueller told Handelsblatt.

Deutsche Bank AG, the country's biggest bank, climbed 45 cents, or 0.4 percent, to 103.34 euros. Together Allianz, Commerzbank and Deutsche Bank account for one fifth of the DAX.

ThyssenKrupp, the country's largest steelmaker, dropped 73 cents, or 2 percent, to 35.96 euros after the industry was cut to ``underweight'' from ``market weight'' by analysts at Credit Suisse, who said weakening demand and rising imports from Asia may lead to lower profits in the U.S. and Europe.

Salzgitter, Germany's second-biggest steel producer, lost 2.29 euros, or 2.3 percent, to 99.31.

The following stocks also rose or fell in the German market. Stock symbols are in parentheses.

Aareal Bank AG (ARL GY) gained 1.39 euros, or 3.9 percent, to 36.8. The commercial property lender, along with Morgan Stanley and J.H. Whitney, may sell its stake in Germany's biggest online real-estate Web site, Immobilienscout24, Der Platow Brief reported, citing documents related to the transaction. Aareal owns 30.5 percent, the German newsletter said.

Bilfinger Berger AG (GBF GY) advanced 81 cents, or 1.4 percent, to 57.12 euros. UBS AG raised its price estimate for the country's second-largest construction company by 25 percent to 68.5 euros, citing growth in services.

Deutsche Telekom AG (DTE GY), the region's largest phone company, added 14 cents, or 1 percent, to 14.07 euros. Equity strategists at Lehman Brothers Holdings Inc., Goldman, Sachs & Co. and JPMorgan Chase & Co. recommended investors be ``overweight'' in telecom stocks in 2007 when they published their outlooks for the new year in December.

Grenkeleasing AG (GLJ GY) gained 3.61 euros, or 10 percent, to 39.5. The company, which buys and leases out technology equipment, said new business rose almost 10 percent to 460 million euros ($610 million) in 2006.

Loewe AG (LOE GY) climbed 98 cents, or 6.6 percent, to 15.82 euros, the steepest rise since October. The television maker partly owned by Sharp Corp. may aim for a return on sales of at least 6 percent in the next three years, the Boersen-Zeitung newspaper reported, citing Chief Executive Officer Rainer Hecker.

Metro AG (MEO GY), the country's largest retailer, declined 1.09 euros, or 2.1 percent, to 49.97 euros after gaining 5.7 percent on takeover speculation yesterday.

``We would take profit ahead of fourth-quarter sales due Jan. 11,'' a team of analysts led by James Grzinic at Dresdner Kleinwort in London wrote in a report published today. ``Metro's problems are structural, not cyclical.'' Dresder Kleinwort has a ``hold'' recommendation on the stock.

Nabaltec AG (NTG GY) gained 1.1 euro, or 6.7 percent, to 17.6 euros. UniCredit Markets & Investment Banking (HVB) rated shares of the maker of flame retardants ``buy'' in new coverage.

Schmack Biogas AG (SB1 GY) dropped 3.3 euros, or 6.6 percent, to 46.85 euros. UniCredit (HVB) cut its recommendation on shares of the maker of alternative fuel plants to ``sell'' from ``hold.'' The current valuation is ``very ambitious,'' analysts wrote in a report.

Tipp24 AG (TIM GY) plummeted 98 cents, or 7.6 percent, to 11.95 euros after the Internet betting company was shut down in the German state of Saxony-Anhalt, the first regional administration to pose such a ban since the states last month signaled they would defend their gambling monopolies.

Shares of Fluxx AG (FXXN GY), another online gambling company, dropped 9 cents, or 2.9 percent, to 3 euros.

TUI AG (TUI1 GY), the travel company that bought CP Ships Ltd., advanced 24 cents, or 1.6 percent, to 15.43 euros.

The world's shipping lines boosted their capacity to move containers by 14 percent in 2006, the fastest pace in six years, data from Containerisation International showed.

Source: bloomberg.com