Emerging-Market Stocks Advance as Europe Debt Concerns Ease

Emerging-market stocks advanced, paring the benchmark index’s second weekly decline, amid speculation European policy makers may contain their region’s sovereign-debt crisis.

The MSCI Emerging Markets Index rose 1.4 percent to 976.84 as of 4:30 p.m. in New York. The gauge has lost 1.6 percent this week. South Korea’s Kospi Index (KOSPI) climbed 3.7 percent. India’s Sensex Index trimmed gains to 0.3 percent after the central bank raised its repurchase rate. The Russian Micex Index fell 0.9 percent as oil weakened.

The European Central Bank said yesterday it coordinated with the U.S. Federal Reserve to extend three-month loans to euro-area banks, raising confidence the region’s debt crisis may be contained. German and French leaders this week expressed support for Greece to remain in the euro monetary union.

“Risk-taking is coming back cautiously with the three- month dollar tenders offered by the Fed, the ECB, the Bank of England, Swiss National Bank and the Bank of Japan,” analysts at BNP Paribas SA including Bartosz Pawlowski in London wrote in an e-mailed report.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell two basis point, or 0.02 percentage point, to 3.84 percentage points, according to JPMorgan Chase & Co. (JPM)’s EMBI Global Index.

Debt Crisis

European finance ministers met in Wroclaw, Poland, today to discuss the euro-area crisis. Jean-Claude Trichet, president of the region’s central bank, said policy makers need to show the same “unity of purpose” as central banks did yesterday in providing extra dollars to European lenders.

The Brazilain Bovespa index advanced for the third day, rising 1.5 percent. Centrais Eletricas Brasileiras S.A., Latin America’s largest publicly traded utility, soared 8.4 percent, the most among gainers on the gauge.

Brazil’s real fell 1.5 percent to 1.7331 per dollar, the weakest level since November. Brazil will continue to adjust monetary policy to take into account the impact that the global economic crisis is having on its economy, central bank President Alexandre Tombini said in Sao Paulo today.

Currencies Fall

The South African rand and Mexican peso also declined against the greenback. The ruble depreciated 0.5 percent versus the dollar as oil fell 1.6 percent in New York.

European finance ministers ruled out efforts to prop up the faltering economy and gave no indication of fresh aid for lenders to go along with yesterday’s liquidity lifeline from the European Central Bank. Meeting with U.S. Treasury Secretary Timothy Geithner, finance chiefs from the euro region said the 18-month debt crisis leaves no room for tax cuts or extra spending to spur an economy on the brink of stagnation.

PKO Bank Polski SA, Poland’s biggest lender, increased 1.6 percent in Warsaw as the WIG20 Index added 0.6 percent. In Turkey, Turkiye Garanti Bankasi AS (GARAN) jumped 2.4 percent in Istanbul as the ISE National 100 Index (XU100) added 1.4 percent. The BUX Index fell 0.1 percent in Budapest.

Exporters gained in Seoul. Samsung Electronics Co., which depends on Europe for 20 percent of its sales, rallied 3.5 percent. Hyundai Motor Co. (005380), South Korea’s largest automaker, added 4.8 percent. Hyundai Heavy Industries Co., the world’s biggest shipbuilder, rose 5.7 percent.

Fund Withdrawals

Emerging-market equity funds reported a seventh week of withdrawals amid concerns the European debt crisis will curb exports to the region, according to Citigroup Inc. Funds investing in developing-nation stocks reported $1.3 billion of outflows in the week ended Sept. 14, Citigroup analysts led by Markus Rosgen wrote in a report dated today, citing figures compiled by EPFR Global.

Taiwan Semiconductor Manufacturing Co. advanced 2.9 percent. The world’s largest contract chip maker signed a contract with Apple Inc. to manufacture a new generation of processors, the Taipei-based DigiTimes reported, citing unidentified people in the chip industry.

India’s central bank raised its repurchase rate to 8.25 percent from 8 percent, the Reserve Bank of India said in a statement today. Fourteen of 17 economists in a Bloomberg News survey predicted the decision and three expected no change.

To contact the reporters on this story: Saeromi Shin in Seoul at sshin15@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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