Nov. 4 (Bloomberg) -- Emerging-market stocks jumped the most in three months on speculation rising commodity prices and faster economic growth in Asia will sustain corporate profits.

The MSCI Emerging Markets Index added 2.5 percent to 926.14 as of 5:04 p.m. in New York for the steepest gain since July 20. China Life Insurance Co., the nation’s biggest insurer, advanced 3.1 percent in Hong Kong as the World Bank raised its forecast for East Asia’s growth. India’s ICICI Bank Ltd. rose 5.3 percent as Finance Minister Pranab Mukherjee said the government won’t withdraw its stimulus. Gerdau SA, Latin America’s largest steelmaker, jumped 3.3 percent in Brazil.

Gold rose to a record $1,092.50 an ounce, while copper rallied as much as 1.3 percent. Crude oil climbed 0.8 percent, its third straight day of gains. Shares in developing nations will lead a first-half advance in global stocks in 2010 as export and domestic demand picks up, according to Prudential International Investments Advisers LLC.

“Emerging markets have not reached a stage where they are very, very expensive or they are in a bubble,” said John Praveen, chief investment strategist at Prudential International, a unit of Prudential Financial Inc., which manages about $580 billion of assets.

The emerging-markets index, up 63 percent this year, trades at 21.5 times reported earnings, lower than the 30 times multiple for the MSCI World Index.

Market Rebound

The MSCI emerging-market index yesterday sank to its lowest level in more than four weeks, tumbling 7.5 percent from this year’s closing high on Oct. 19, amid concern a yearlong rally has outpaced the prospects for earnings and economic growth.

Emerging-market bonds increased and currencies rallied against the dollar as the Federal Reserve restated its intention to keep interest rates “exceptionally low” for “an extended period” as long as inflation expectations are stable and unemployment fails to decline. South Africa’s rand paced gains, advancing 2.8 percent.

The extra yield investors demand to own developing nations’ bonds instead of U.S. Treasuries narrowed 11 basis points to 3.14 percentage points, the smallest gap since Oct. 26, according to JPMorgan Chase & Co.’s EMBI+ Index.

India’s benchmark Bombay Stock Exchange’s Sensitive Index jumped 3.3 percent, while South Korea’s Kospi index added 1.9 percent. China’s Shanghai Composite Index advanced for a fourth day, adding 0.5 percent, the longest winning streak in almost two months. South Africa’s FTSE/JSE Africa All Share Index increased 0.7 percent.

East Asia

Developing East Asia, which excludes Japan, Hong Kong, Taiwan, South Korea, Singapore and the Indian subcontinent, will expand 6.7 percent this year, more than an April estimate of 5.3 percent, the Washington-based World Bank said its semi-annual report today. Growth may be 7.8 percent next year, it said.

In eastern Europe, Hungary’s BUX Index jumped 3.1 percent. Poland’s WIG20 climbed 2.5 percent, the most in three weeks. Bank Handlowy SA, the Polish unit of Citigroup Inc., advanced 5.4 percent after reporting a 32 percent increase in third- quarter profit.

Brazilian stocks climbed to the highest level in a week after steelmaker Cia. Siderugica Nacional SA’s profit topped analyst estimates, bolstering the earnings outlook for commodity producers. CSN, as Brazil’s third-biggest steelmaker is known, jumped 3.1 percent.

Gerdau, scheduled to report earnings tomorrow, gained 88 centavos to 27.49 reais. The Bovespa added 2 percent.

To contact the reporters on this story: Shiyin Chen in Singapore at schen37@bloomberg.net; Tian Huang in New York at thuang57@bloomberg.net.

Last Updated: November 4, 2009 17:18 EST