Emerging-market stocks advanced, driving the benchmark index to the highest level in two months, on speculation Europe’s debt crisis is easing and the U.S. economy is improving.
The MSCI Emerging Markets Index (MXEF) added 1.1 percent to 991.38 at the close in New York, its third daily gain and the highest since Oct. 31. Brazil’s Bovespa (IBOV) added 0.3 percent. The Shanghai Composite Index (SHCOMP) climbed 1.3 percent and the BSE India Sensitive Index (SENSEX) jumped 1.2 percent. Hungary’s forint gained as Prime Minister Viktor Orban signaled he would compromise over disputed laws that halted bailout talks.
Debt sales in Spain and France eased funding concerns for European nations. Spain sold 6.61 billion euros ($8.6 billion) of debt, exceeding the maximum target of 4.5 billion euros, while French borrowing costs declined as the nation sold 7.97 billion euros of medium and long-term securities. U.S. jobless claims plunged to the lowest level in four years.
“Things for now feel a little bit calmer in Europe,” said Greg Lesko, managing director at Deltec Asset Management in New York. “We do still have the Greece issue out there. I don’t think you can say it’s an all clear, but people are getting a little bit more risk tolerant.”
U.S. economic data also helped emerging-market equities, with fewer Americans than forecast filing first-time applications for unemployment benefits last week, as claims plunged to the lowest level since April 2008, Labor Department figures released in Washington today showed.
Brazil’s Bovespa stock index advanced for a fourth day after the central bank signaled it will maintain its pace of interest-rate cuts, boosting the outlook for companies that benefit from domestic demand. Consumer-goods maker Hypermarcas SA and retailer B2W Cia. Global do Varejo were the best performers on the gauge. Confab Industrial SA surged the most in almost five months after parent Tenaris SA raised an offer to buy out minority shareholders by 13 percent.
China’s central bank will let larger lenders increase new loans by a maximum of about 5 percent from a year earlier, according to two people at state lenders who declined to be identified as the order isn’t public. The banking regulator is delaying implementing the most stringent capital adequacy ratios and may lower risk weightings for loans to small businessmen and companies, four unnamed people said separately.
The People’s Bank of China cut the amount banks must keep in reserves by 50 basis points, or 0.50 percentage point, in December, reducing the so-called reserve-requirement ratio for the first time in three years.
The Greek government held a second day of talks with private creditors in a push to reach an accord on reducing the nation’s debt. Greece will also enter the “final phase” of discussions on a second financing package with European Commission, European Central Bank and International Monetary Fund representatives in Athens tomorrow, Finance Minister Evangelos Venizelos said.
The forint appreciated 0.5 percent against the euro. Hungary is ready to “entirely rework” two temporary provisions of the constitution that took effect on Jan. 1 should the European Union request it, Orban told reporters yesterday in Strasbourg, France. The prime minister had shunned the IMF since taking office in 2010 to prevent interference in what he called his “unorthodox” measures.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell 15 basis points, or 0.15 percentage point, to 418 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.
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