Emerging Stocks Advance on U.S. Business Activity Data, Europe

Emerging-market stocks rose as concern Europe’s debt crisis will hurt global growth eased after Italian borrowing costs declined at an auction and a U.S. report showed business activity expanded more than forecast.

The MSCI Emerging Markets Index (MXEF) rose 0.1 percent to 914.21 at the close in New York, as 442 companies gained and 312 fell. Brazil’s Bovespa (IBOV) index rose 0.4 percent while Mumbai’s Sensitive Index, or Sensex (SENSEX), retreated 1.2 percent. The FTSE/JSE Africa All Share Index (JALSH) fell 0.3 percent in Johannesburg. Russia’s Micex advanced for the first time in three days.

Italy sold 7.02 billion euros ($9.06 billion) of debt due from 2014 to 2022, less than its original target of as much as 8.5 billion euros, as borrowing costs declined in its final debt sale of the year. The Institute for Supply Management-Chicago Inc.’s business barometer signaled continued growth in the world’s largest economy.

“People are still generally cautious with what is happening in Europe,” said Bharat Joshi, who helps manage $5 billion at Kuala Lumpur-based Aberdeen Asset Management Sdn. “People are waiting at the sidelines. The U.S. recovery has been showing signs of positive traction.”

The MSCI Emerging Market Index has lost 21 percent this year as Europe’s debt problems compounded concerns about slowing global growth. Shares on the developing nation index are trading at 10 times estimated earnings, compared with 12.1 times on the MSCI World Index (MXWO), which has fallen 8 percent this year.

Brazil, Russia

The Bovespa advanced, paring its first annual decline since 2008, after Brazil’s broadest price index fell in December. The benchmark ended the year with an 18 percent retreat.

Lupatech SA (LUPA3), Brazil’s biggest provider of oil equipment and services, advanced 3.5 percent after saying it will sell as much as 700 million reais ($374 million) of new stock.

MMX Mineracao & Metalicos SA (MMXM3), the iron-ore miner controlled by billionaire Eike Batista, rose to a three-week high after signing a shipment agreement.

The Micex Index climbed 0.4 percent in Moscow. OAO GMK Norilsk Nickel (GMKN), Russia’s largest miner, rose 2.9 percent after the company said on its website it plans to increase capital spending at least 7 percent in 2012.

The ruble weakened 1 percent while the rand appreciated 0.5 percent against the dollar.

Gold

Anglo American Plc (AGL), a mining company that accounts for more than 9 percent of South Africa’s benchmark stock index, fell 0.9 percent as gold tumbled.

China’s Shanghai Composite Index (SHCOMP) rose 0.2 percent, reversing an earlier loss of 0.6 percent, as low valuations and anticipation of policy easing boosted buying interest, according to Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co.

The People’s Bank of China may reduce lenders’ reserve requirements after New Year’s Day, according to a commentary in the China Securities Journal today. The central bank last cut reserve ratios by 50 basis points to 21 percent with effect from Dec. 5.

The extra yield (JPEGSOSD) investors demand to own emerging-market debt over U.S. Treasuries rose one basis point, or 0.01 percentage point, to 418, according to JPMorgan Chase & Co. (JPM)’s EMBI Global Index.

To contact the reporter on this story: Gan Yen Kuan in Kuala Lumpur at ykgan@bloomberg.net; Jason Webb in London at jwebb25@bloomberg.net.

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

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