Emerging-Market Stocks Rise to One-Month High on U.S. Growth, Europe Bonds

Emerging-market stocks rose, driving the benchmark index to the highest level in a month, as borrowing costs fell for some European nations.

The MSCI Emerging Markets Index (MXEF) gained 0.5 percent to 953.48 at the close in New York, the highest since Dec. 7. The BUX Index (BUX) rose 1.6 percent after Hungary sold more bonds than planned at an auction today as financing costs fell. Brazil’s Bovespa Index (IBOV) fell for the first time in five days.

Government financing concerns eased as Spain sold twice its maximum target of 5 billion euros ($6.4 billion) in an auction of bonds maturing in 2015 and 2016, while borrowing costs plunged in an Italian debt sale. Still, American jobless claims and retail sales data fell short of analysts’ estimates.

“After a positive reaction to the auction results, the U.S. numbers have spoiled the party a little bit,” Daniel Lenz, the chief emerging-markets strategist at DZ Bank AG, said in an interview from Frankfurt. “The auctions for Italian and Spanish bonds were far better than expected. The auction yields were much lower.”

The European Central Bank left its benchmark interest rate at 1 percent today, in line with the median forecast of 53 economists in a Bloomberg News survey. ECB President Mario Draghi said “there are tentative signs of stabilization of economic activity” while “the economic outlook remains subject to high uncertainty and substantial downside risks.”

Developing-nation equities have added 4 percent this year, besting the 2.1 percent gains for developed markets. Emerging- market stocks remain cheaper than those in developed nations, trading for 9.7 times projected earnings. Developed-country shares trade for 11.7 times forecast profits.

Real, Bovespa

Brazilian stocks slid 0.1 percent. Vale SA (VALE5), the world’s largest iron-ore producer, fell 1.1 percent after saying it will lose 2 million metric tons of production, or 0.6 percent of last year’s output target, because of heavy rains.

The real appreciated 1.3 percent against the dollar and the ruble advanced 0.5 percent.

The forint strengthened 0.9 percent against the euro as Hungary sold 44 billion forint ($181 million) of bonds, 11 billion forint more than planned, in an auction.

Oil dropped 1.8 percent after a proposed European Union embargo of Iranian oil imports was said likely to be delayed for six months.

Solar Companies

The Shanghai Composite Index (SHCOMP) fell less than 0.1 percent after the government in Beijing said Chinese consumer prices rose 4.1 percent in December from a year earlier last month, slowing from a 4.2 percent rate of increase in November.

GCL-Poly Energy Holdings Co. (3800), China’s biggest polysilicon manufacturer, jumped 14 percent in Hong Kong and OCI Co. (010060), South Korea’s biggest maker of the material, surged 15 percent. The price for polysilicon, the raw material used to make most solar panels, rose 3 percent last week, the most in eight months, Bloomberg New Energy Finance data showed.

Infosys (INFO) sank 8.4 percent in Mumbai, its biggest loss since April, after the company cut its sales estimate for the year ending March 31 to a range of $7.029 billion to $7.033 billion. The company forecast in October its sales would range from $7.08 billion to $7.2 billion.

Spain, Italy

Spain auctioned 9.98 billion euros ($12.7 billion) of bonds maturing in 2015 and 2016, twice the maximum target of 5 billion euros set for the sale. The yield on the three-year notes was 3.384 percent, compared with 5.187 percent when the nation sold similar notes in December.

Italy sold 12 billion euros of Treasury bills, meeting its target, and its borrowing costs plunged. The Rome-based Treasury sold 8.5 billion euros one-year bills at a rate of 2.735 percent, down from 5.952 percent at the last auction.

U.S. jobless claims rose by 24,000 to 399,000 last week, higher than the median estimate of 375,000 in a Bloomberg News survey of 46 economists. Retail sales rose 0.1 percent, less than the projected 0.3 percent pace. The Standard & Poor’s 500 Index added 0.2 percent.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell six basis points, or 0.06 percentage point, to 430, according to JPMorgan Chase & Co.’s EMBI Global Index.

-- With assistance from Jason Webb in London. Editor: Marie- France Han

To contact the reporter on this story: Ian Sayson in Manila at isayson@bloomberg.net; Zachary Tracer in New York at ztracer1@bloomberg.net.

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

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