Most Emerging Stocks Rise as U.S. Expansion Beats Europe Recession Concern

Most emerging-market stocks advanced as an improving U.S. economic expansion outweighed concern that Europe may be headed for a recession.

The MSCI Emerging Markets Index was little changed at 948.65 at the close in New York as 412 stocks rose and 358 declined. Brazil’s Bovespa stock index advanced for a fourth day after a measure of prices unexpectedly dropped. Turkish shares gained 1.2 percent. Czech, Polish and Hungarian equities declined. The Philippine Stock Exchange Index (PCOMP) rose to a record after the central bank said monetary policy may be eased this quarter.

The U.S. economy expanded at “a modest to moderate pace” from late November through December, according to the U.S. central bank. Germany may be on the brink of recession after the sovereign debt crisis caused the economy to contract in the final quarter of 2011. Europe’s largest economy shrank “roughly” 0.25 percent in the fourth quarter from the third, the Federal Statistics Office in Wiesbaden said today in an unofficial estimate.

“The outlook in the U.S. is for modest growth this year, and that’s better than Europe. Expectations are Europe will be in a recession,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion.

The MSCI Emerging Markets Index (MXEF) has gained 3.5 percent this year, while the MSCI World Index (MXWO) of developed nations added 1.8 percent. The gauge of developing nations is valued at 9.6 times estimated profit, compared with the MSCI World’s multiple of 11.7 times.

Hungarian Bonds

Hungary will auction 33 billion forint ($135 million) in notes maturing in 2014, 2017 and 2022 at a biweekly bond sale tomorrow, according to data from the Debt Management Agency on Bloomberg.

The benchmark BUX (BUX) stock index fell 1.8 percent, led by Mol Nyrt. (MOL), the country’s largest refiner.

Standard & Poor’s GSCI index of commodity prices slid 0.7 percent, its first decline in four days. Oil futures dropped 1.3 percent in New York.

The Bovespa (IBOV) rose 0.3 percent in Sao Paulo. Steelmaker Usinas Siderurgicas de Minas Gerais SA led gains on the index after metal prices rose. Gerdau SA (GGBR4), Latin America’s largest steelmaker, advanced 1.3 percent after saying it plans to buy back as many as 2.69 million preferred shares.

The first preview of Brazil’s IGP-M index of wholesale, construction and consumer prices showed the measure declined 0.01 percent this month, the Getulio Vargas Foundation said on its website today. That compares to a median estimate for a 0.10 percent increase in a Bloomberg survey of 13 economists.

In China, consumer prices will probably slow to 4 percent in December, according to the median estimate of economists surveyed by Bloomberg News. China may raise both lending and deposit rates by 25 basis points this year, Robert Prior- Wandesforde and Dong Tao, analysts at Credit Suisse Group AG, wrote in a report.

China Shares

“Although economic activity is likely to soften further in 2012, inflation will probably remain above the government’s comfort zone, making a policy rate increase far more likely than a rate cut in our view,” the analysts wrote.

Huaneng Power International Inc. (902) slid 2.5 percent in Hong Kong, leading declines among electricity producers, after the Xinhua News Agency said the nation’s power consumption growth may decelerate this year. China Unicom (Hong Kong) Ltd. fell 3.5 percent amid concern competition will increase among carriers in the mainland.

The Philippine Stock Exchange Index rose 1.9 percent to 4,645.86, a record close. Philippine National Bank gained 2.6 percent and Metropolitan Bank & Trust Co. rose 1.6 percent after the central bank said commercial bank loans net of overnight placements with the monetary authority grew 22.5 percent in November from a year earlier.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose six basis points, or 0.06 percentage point, to 433, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporter on this story: Gan Yen Kuan in Kuala Lumpur at ykgan@bloomberg.net Stephen Gunnion in Johannesburg at sgunnion@bloomberg.net

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

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