Germany's DAX passes pre-crisis peak to hit record

Tue May 7, 2013 11:53am BST

* DAX passes 2007 high, first euro zone index to do so

* Non-euro-zone FTSE next in line to follow suit

* Peripheral indexes way behind, Greece the laggard

By Simon Jessop

LONDON, May 7 (Reuters) - Germany's top stock index hit a record high on Tuesday, the first major European market to top peaks hit before the financial crisis hammered share values.

The blue-chip DAX, packed with in-demand international exporters, hit an intraday high of 8,160.14 points, passing its previous best of 8,151.57 points for the first time since mid-2007.

While its 29 percent gain in 2012 has given way to a more moderate 7 percent so far in 2013, the DAX is the only leading euro zone bourse to make it back above its 2007 high.

"We have seen ... outperformance of the DAX on the back of the good developments in the German manufacturing base, which has outstripped other countries quite substantially because of its high competitiveness," said Gerhard Schwarz, head of equity strategy at Baader Bank.

The low number of banks, which suffered during the debt crisis, and the inclusion of dividend returns in calculating the index, had also helped, he added.

German stocks enjoyed safe-haven status at times of political stress during the euro zone's three-year-old debt crisis. Lately, like other stock markets around the world, it has been pushed higher by a wave of central bank liquidity.

The UK's FTSE 100 is around 3 percent off matching the DAX's move but Germany's euro zone peers are some way off.

Even stock markets in other highly-rated countries, such as the Netherlands and France - described as the euro zone's "semi-core" - are lagging. Both are just under 60 percent away from their pre-crisis peaks.

Dan Morris, strategist at JPMorgan Asset Management, said the disparity was justified given the superior earnings quality of many German companies and, in the case of France particularly, the structural challenges facing the country.

"Comparatively speaking the semi-core has not done as badly, because they weren't in the periphery... (but) you may need a more fundamental recovery in those markets before the indexes recover," he added, citing specific market concerns around taxation and labour market rigidities in France.

Indexes in countries beset by high borrowing costs and austerity-hit economies bring up the rear, even after a European Central Bank pledge last July to defend the single currency.

Spain's IBEX, up 5 percent this year, is 87 percent away from its 2007 high, while Italy - up nearly 5 percent in 2013 after languishing during weeks of political uncertainty - is 160 percent off its high.

Bringing up the rear is Greece's ATG index. The country, whose threatened default fuelled fears the euro could collapse, is worth just a fifth of its pre-crisis value. (Additional reporting by Blaise Robinson and Toni Vorobyova, editing by Nigel Stephenson)