Germany’s Dax index broke through, and closed above, the 12,000 barrier for the first time yesterday as German equities emerged as the main beneficiaries of the European Central Bank’s quantitative easing programme.

The striking performance of eurozone shares, led by German blue-chips, suggests the ECB’s efforts to boost the region’s economy and stave off deflation are working.

Even before the bank fired the starting gun on its €1.1 trillion quantitative easing programme last week, leading German companies were receiving a huge boost from low interest rates, sharply falling oil prices and a weaker euro that increased their foreign-based revenues.

Andrew Parry, head of equities at Hermes Investment Management, said: "Germany was already doing well as an economy. It didn't need quantitative easing – so it is getting an extra bit of oomph, free and gratis."

Some $35.6 billion has flowed into European equity funds so far this year, surpassing the previous record of $32 billion set in the first quarter of 2014, according to data provider EPFR. The inflows are favouring Germany's large companies, with strong share price rallies by the likes of Daimler, Volkswagen, BMW, Merck, BASF and Deutsche Telekom.

The Dax climbed 24 per cent this year, and excluding dividends has outperformed other euro zone markets.

Investors have piled into equities as expectations of quantitative easing pushed a quarter of euro zone government bonds into negative yielding territory, which forced investors in search of returns to look to riskier assets. With a dividend yield of 2.25 per cent, the Dax compares favourably with a 10-year yield of 0.22 per cent for German government bonds.

As Europe’s biggest exporter, Germany has benefited from quantitative easing’s deliberate weakening of the euro, which has fallen 12 per cent against the dollar since the beginning of the year. About 22 per cent of Dax revenues were in dollars, compared with 14 per cent of revenues on France’s CAC Index.– © The Financial Times Ltd 2015