Bloomberg News

Emerging-Market Stocks Rise Most in Month on Europe Optimism

November 29, 2011

Nov. 28 (Bloomberg) -- Emerging-market stocks climbed the most in a month on speculation European policy makers are taking steps to stem the debt crisis and as the U.S. posted record Thanksgiving retail sales.

The MSCI Emerging Markets Index jumped 3 percent to 903.53 at 10:27 a.m. New York time, on course for the biggest gain since Oct. 27. The gauge closed last week at a seven-week low. The Bovespa stock index gained 2.3 percent and Chile’s benchmark rose 2.7 percent. The Micex Index surged 4 percent in Moscow as oil rose 2.6 percent in New York. The Hang Seng China Enterprises Index of Chinese stocks listed in Hong Kong gained 2.3 percent and the BSE India Sensitive Index, or Sensex, rose 3 percent, the most since Aug. 29.

German Chancellor Angela Merkel and French President Nicolas Sarkozy are planning a fast-track stability deal, the Welt am Sonntag newspaper reported. The International Monetary Fund is preparing a 600 billion euro ($799 billion) loan for Italy in case the debt burden worsens, La Stampa reported, without saying where it got the information. U.S. retail sales during the Thanksgiving weekend advanced 16 percent to $52.4 billion, according to the National Retail Federation.

“The worst fears over the EU crisis seems to have abated and the IMF may be playing into that,” Neil Shearing, senior emerging market analyst at Capital Economics Ltd. in London, said in a phone interview. “It’s a combination of different factors, the most obvious is the U.S. consumer spending over the holiday period.”

EU Summit

Merkel and Sarkozy are considering a fast-track stability deal, under which member states will commit to greater fiscal discipline without waiting to change European Union treaties, Welt am Sonntag reported, without saying where it got the information. Merkel will deliver a speech on the crisis to the lower house of parliament in Berlin on Dec. 2, previewing a Dec. 8-9 summit of European leaders that is due to discuss proposals for treaty change, Merkel’s chief spokesman, Steffen Seibert, told reporters today.

A spokesperson for the IMF said today it isn’t discussing an Italian rescue package.

The WIG20 Index jumped 2.2 percent in Poland, which sends most of its exports to the EU. The BUX Index gained 1.7 percent in Budapest.

OAO Sberbank, Russia’s biggest lender, surged 5.8 percent in Moscow. OAO Lukoil, the country’s second-biggest oil producer, jumped 4.2 percent.

Oil rose as much as 4.1 percent in New York.

Bovespa Advances

The Bovespa stock index gained the most in two weeks as speculation European leaders are intensifying efforts to contain the region’s debt crisis lifted commodities and boosted the outlook for Brazilian producers.

Usinas Siderurgicas de Minas Gerais SA led advances on the gauge, rising 6.6 percent, after Ternium SA and Tenaris SA agreed to pay 5.03 billion reais ($2.7 billion) for a voting stake in the steelmaker. Iron-ore producer Vale SA rose 1.9 percent, the most in more than three weeks after saying it plans to invest $21.4 billion on mining projects in 2012. Oil companies Petroleo Brasileiro SA and OGX Petroleo & Gas Participacoes SA followed crude prices higher.

The FTSE/JSE Africa All Share Index advanced 2.1 percent in Johannesburg, the most in four weeks. BHP Billiton Plc, the world’s biggest mining company, which rose 3.2 percent as metals prices jumped.

The Hungarian forint surged 3.1 percent against the dollar and 2.2 percent versus the euro. The Brazilian real and the South African rand gained 2.2 percent against the U.S. currency while the Indonesian rupiah fell 0.7 percent.

Reliance, LG Electronics

Reliance Industries Ltd., India’s most valuable company, jumped 4 percent, its first gain for four days.

LG Electronics Inc., the world’s third-largest handset maker, surged 8.6 percent in Seoul. LG Display Co., the world’s second-largest flat panel maker, jumped 6.3 percent.

South Korea’s Kospi index gained 2.2 percent and Taiwan’s Taiex Index rose 1.7 percent.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries sank 19 basis points, or 0.19 percentage point, to 423, according to JPMorgan Chase & Co.’s EMBI Global Index.

The Markit iTraxx SovX CEEMEA Index of eastern European, Middle East and Africa credit-default swaps fell 24 basis points to 363, according to data provider CMA.

--With assistance from Kana Nishizawa in Hong Kong. Editor: Marie-France Han

To contact the reporter on this story: Ksenia Galouchko in New York at kgalouchko1@bloomberg.net; Weiyi Lim in Singapore at wlim26@bloomberg.net; Jason Webb in London at jwebb25@bloomberg.net.

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net


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