SIEMENS AG's new Chief Executive Officer Peter Loescher faces an "uphill battle" to restore the German company's image after a six-month bribery investigation, according to shareholder group DSW.

Siemens, Europe's largest engineering company, appointed the Merck & Co executive yesterday to succeed Klaus Kleinfeld, who resigned after less than three years because of the probe. The 49-year-old Austrian will become the first CEO hired from outside the Munich-based company in its 160-year history when he starts his new job on July 1, Bloomberg News reports.

"It will be an uphill battle for Loescher," said Juergen Kurz, a spokesman for DSW, Germany's largest group representing minority shareholders. "To appoint an outsider is a cultural revolution for Siemens and Loescher first needs to gather support from all kinds of interest groups within the company."

The appointment of an outsider marks a shift at Siemens, whose reputation has been battered by the probe into consulting contracts that led to the resignation of Kleinfeld on April 25, less than a week after Chairman Heinrich von Pierer quit. Loescher inherits a restructuring program started by Kleinfeld.

Shares rose as much as 2.46 euros, or 2.7 percent, to 95 euros, and traded at 93.62 euros as of 9:29am in Frankfurt. Before yesterday, the stock had gained 23 percent this year, compared with a 15 percent increase in Germany's benchmark DAX Index.

"Investors will be really relieved about Loescher's appointment as it ends the power vacuum at Siemens," said Ben Uglow, a Morgan Stanley analyst.