May 13 (Bloomberg) -- Emerging-market stocks fell the most in two weeks after U.S. retail sales unexpectedly dropped in April and China’s industrial production grew less than forecast, prompting investors to shun higher-yielding assets.

The MSCI Emerging Markets Index lost 1.6 percent, the most since April 27, to 709.43 at 4:21 p.m. New York time. OAO Gazprom, Russia’s largest natural gas producer and pipeline monopoly, had its steepest loss in three weeks. Gerdau SA led declines in Brazilian steelmakers on concern the global economic slowdown will hurt prices and demand.

Developing nation stocks fell as U.S. retail sales fell 0.4 percent in April, indicating rising unemployment is prompting consumers to boost savings. Industrial production in China rose 7.3 percent from a year earlier, the statistics bureau said today. That was less than the 8.6 percent median estimate of 20 economists surveyed by Bloomberg News.

Brazil’s Bovespa Index fell for a third day, losing 3.3 percent, after Deutsche Bank AG and Banco Santander SA said the country’s stocks are expensive. Gerdau SA, Latin America’s biggest steelmaker, sank 6 percent. Mexico’s Bolsa lost 2.3 percent.

In Eastern Europe, Czech stocks sank 6.2 percent, while Russia’s Micex index plunged 4.9 percent. OAO Gazprom slid 6.1 percent.

India’s Sensitive Index fell 1.1 percent after exit polls showed the nation’s ruling Congress party-led coalition may have won the most seats in elections without securing enough votes to form a government.

Emerging-market bonds fell, with the extra yield investors demand to own developing nations’ bonds instead of U.S. Treasuries widening 16 basis points, or 0.16 percentage point, to 5.05 percentage points, according to JPMorgan Chase & Co.’s EMBI+ Index.

To contact the reporters on this story: Fabio Alves in New York at falves3@bloomberg.net

Last Updated: May 13, 2009 16:41 EDT