Emerging Stocks Drop First Day in Five on Spain Debt, China

Emerging-market stocks fell for the first time in five days after China damped speculation of a stimulus package while Spanish and Italian borrowing costs rose, sending commodity shares lower.

The MSCI Emerging Markets Index (MXEF) slid 1.5 percent to 907.88 at the close in New York, headed for a 12 percent plunge this month, the most since September. Brazil’s Bovespa fell 1.5 percent to a seven-month low as HRT Participacoes em Petroleo SA declined 12 percent in Sao Paulo. Russia’s Micex Index dropped, with OAO Lukoil falling as crude oil retreated.

China has no plans to introduce stimulus measures on the scale deployed during the global financial crisis, Xinhua News Agency reported. Spain’s 10-year bond yields jumped to a euro- era record relative to German bunds. Italy sold 5.73 billion euros ($7.1 billion) of bonds, short of its maximum target for the auction, as borrowing costs rose from a previous sale. The Standard & Poor’s GSCI Spot Index of 24 raw materials declined 2.3 percent to 603.28, the lowest level since Oct. 5.

“The slowdown in China’s economy will likely continue,” said Arifin Hasudungan, an analyst at Jakarta-based PT Mega Capital Investama, which manages about $209 million in assets. “For Europe, investors’ attention is again focused on Greece and Spain. Developments there are hurting market confidence.”

China Slowdown

The MSCI Emerging Markets Index has erased this year’s advance amid signs of a deepening slowdown in China and as European leaders pressure Greece to meet bailout terms and stay in the euro. Greece will hold an election next month that may determine its course of action.

The emerging-markets gauge has slipped 0.9 percent this year, compared with a 0.1 percent decline in the MSCI World Index.

Lukoil, Russia’s second-biggest natural gas producer, tumbled 1.4 percent as crude for July delivery sank to a seven- month low. OAO Novatek retreated 3.1 percent after the nation’s finance minister indicated Russia may raise taxes on oil and gas producers. Russia’s Micex Index slipped 1.4 percent.

Brazil’s Bovespa dropped to the lowest level since Oct. 10. PDG Realty SA Empreendimentos e Participacoes (PDGR3), Brazil’s biggest homebuilder, added 1.5 percent after falling 11 percent in trading yesterday.

The FTSE/JSE Africa All Share Index (JALSH) slid 1.4 percent in Johannesburg as copper and gold retreated in London. The ISE National 100 Index (XU100) slipped 0.6 percent in Turkey. Taiwan’s Taiex (TWSE) Index lost 1.1 percent and South Korea’s Kospi Index declined 0.3 percent.

The WIG20 Index (WIG20) tumbled 0.9 percent in Poland, which sends most of its exports to the euro region.

Besiktas, ICBC

Besiktas Futbol Yatirimlari Sanayi & Ticaret AS (BJKAS), the merchandising unit of Turkish sports club Besiktas, plunged 8.8 percent to the lowest level in almost two years after CNBC-e television reported that its soccer team was banned from European competitions for a year.

The Hang Seng China Enterprises Index (HSCEI) of Chinese companies listed in Hong Kong dropped 1.7 percent.

Industrial & Commercial Bank of China Ltd., the nation’s biggest listed lender, fell 1.7 percent, the first decline in three days. Bank of Communications Co. Ltd., a Chinese provider of commercial banking services, lost 1.4 percent.

‘Government’s Intention’

“The Chinese government’s intention is very clear: It will not roll out another massive stimulus plan to seek high economic growth,” Xinhua said yesterday in a Chinese-language article on economic policy, without attributing the information. “The current efforts for stabilizing growth will not repeat the old way of three years ago.”

The Sensitive Index, or Sensex (SENSEX), fell 0.8 percent in Mumbai.

Tata Motors Ltd. (TTMT), India’s largest automaker, sank 12 percent after its main Jaguar Land Rover unit missed analysts’ profit estimates. Jaguar’s fourth-quarter earnings before interest, taxes, depreciation and amortization of 605.4 million pounds ($940 million) missed estimates at Deutsche Bank AG and Nomura Holdings Inc.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose 11 basis points, or 0.11 percentage point, to 422, according to JPMorgan Chase & Co.’s EMBI Global Index.

To contact the reporters on this story: Christine Harvey in New York at charvey32@bloomberg.net; Jason Webb in London at jwebb25@bloomberg.net

To contact the editors responsible for this story: Gavin Serkin at gserkin@bloomberg.net; Tal Barak Harif at tbarak@bloomberg.net

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