German shares close higher on auto sector UPDATE

German shares close higher on auto sector UPDATE

	Published : Wed, 21 Mar 2007 18:57 By : Agencies Print this Story

(updates with full report)

FRANKFURT (AFX) - Share prices closed higher as the auto sector lifted the DAX, led by BMW, dealers said.

The DAX closed up 11.77 points, or 0.18 pct, at 6,712.06 after trading between 6,688.34 and 6,729.65.

The MDAX was 2.04 points, or 0.02 pct higher at 9,920.07, while the TecDAX added 6.17 points, or 0.75 pct, to 833.70.

DAX futures were up 19.50 points, or 0.29 pct, to 6,777.50.

The euro traded at 1.3300 usd compared with 1.3297 in late London trade.

BMW was the top performer, rising 1.64 eur or 3.97 pct to 42.90 eur. Dealers cited chart technical reasons for the strong showing, with many buy orders arriving once the issue crossed the 42 eur level.

The sharp gain lifted the entire sector, with Volkswagen up 2.60 eur to 108.30, DaimlerChrysler up 0.20 to 57.00 and MAN up 1.37 to 87.43.

Financials received a boost from a positive broker note from Goldman Sachs.

The brokerage raised its stance on the European banking sector -- except for

investment banking -- to 'overweight' from 'neutral'.

According to the note, the German market has overreacted to the negative

sub-prime mortgage news which came out of the US recently.

The overreaction gives investors the chance to enter the banking sector at a

discounted share price, the brokerage said.

Mortgage lender Hypo Real Estate was 1.29 eur to 47.50.

Commerzbank added 0.29 eur at 31.88, while Germany's largest bank, Deutsche Bank, added 1.01 eur to 97.55, despite its heavy dependence on investment banking revenues.

Peer Deutsche Postbank was up 0.25 eur at 63.08. Traders said a bullish broker note from Sal Oppenheim was also helping Postbank shares today.

The brokerage raised its stance on Postbank to 'strong buy' from 'neutral'

and pegged its price target at 80 eur per share.

SAP rose 0.35 eur, or 1.03 pct, at 34.27, after US peer Oracle reported

third-quarter earnings per share of 0.25 usd, 0.03 usd above consensus, dealers

said.

Some market observers had speculated Oracle might release a profit warning

yesterday, which put pressure on SAP stocks throughout the day, they added.

'SAP underperformed in the German market yesterday as there were fears of a

Oracle profit warning,' said one Frankfurt dealer. 'SAP's shares are relatively

strong right now, but there is a chance it will retreat after Oracle said it won

market share from SAP.'

Metro was the worst performer, down 2.15 eur or 2.83 pct to 53.96.

The retail giant said its full-year net profit rose to 913 mln eur from 501

mln last year, beating an average analyst forecast of 895.4 mln but failing to

impress as traders said the market was largely expecting numbers in that range.

According to one trader, the results contained few surprises as the world's

third-largest retailer met its own goals over the last year.

TUI lost 0.26 eur at 17.95, as the DAX top underperformer, after it was revealed that the tourism and shipping conglomerate is being probed by German market regulator Bafin over the timing of the disclosure of the merger of its tourism operations with UK's First Choice Holidays PLC.

TUI may have breached its legal obligation to disclose the deal in due time,

a Bafin spokeswoman said, pointing out media reports had already announced the

merger on Sunday while TUI did not disclose it until Monday.

Lufthansa was 0.11 eur lower at 20.25, on speculation that the German flagship carrier might make a 3.90 eur per share bid for a 9 pct stake in Spanish rival Iberia Lineas Aereas SA, perhaps leading to an eventual takeover attempt, dealers said.

Traders said that a rumour on a website, hispanidad.com, said that Caja

Madrid was planning to sell a 9 pct stake in Iberia. Speculation that Lufthansa

might launch a bid for either the stake or the entire airline began shortly

thereafter, they said.

Lufthansa, Iberia and Caja Madrid all declined to comment on the takeover

speculation.

Leoni led decliners on the MDAX, dropping 1.31 eur, or 4.22 pct, at 29.70.

Hochtief also dropped 1.25 eur, or 1.77 pct, at 69.51, on speculation of further sell-offs after Custodia Holdings AG's sale of its 25.08 pct stake in the German construction company to Spain's Actividades de Construcciones y Servicios (ACS) for 1.264 bln eur.

On the positive side, Bilfinger Berger gained 3.52 eur, or 5.48 pct, at

67.76, as the strongest performer, after CEO Herbert Bodner said this year's net

profit target of 100 mln eur is a minimum goal.

Answering questions at the company's annual results news conference, Bodner

also said its 5-10 pct organic growth targets for output this year are realistic

levels.

Q-Cells was the sharpest gainer on the TecDAX, up 1.35 eur, or 2.91 pct, at

47.77, while GPC Biotech was down 0.49, or 2.26 pct, at 21.15.

alfred.kueppers@thomson.com

amk/cml/amk/jlc

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