Emerging Stocks Rise on U.S. Jobs Data While Real Surges

Emerging-market stocks rose, trimming the first weekly drop in about a month, after a worse-than-estimated U.S. jobs report damped speculation the Federal Reserve will slow the pace of bond purchases at the world’s largest economy. Brazil’s real rebounded from a four-year low.

The MSCI Emerging Markets Index gained 0.1 percent to 955.35, after falling as much as 0.3 percent earlier. The measure pared its weekly decline to 0.6 percent. Benchmark indexes in Poland, the Czech Republic and Turkey rallied, while Brazil’s Ibovespa dropped for the fourth time this week as OGX Petroleo & Gas Participacoes SA tumbled. Philippine stocks retreated to a three-week low, led by SM Investments Corp. (SM) Seventeen out of the 24 developing-nation currencies tracked by Bloomberg rose as the real climbed 0.7 percent.

Stocks erased losses as data showed that U.S. employers added fewer workers than anticipated in July and the U.S. jobless rate dropped to 7.4 percent, bolstering speculation the Federal Reserve will keep its economic stimulus pace. The benchmark measure for emerging markets has slumped 8.9 percent since May 22, when the Fed signaled its asset-buying program could be cut if the economy showed sustained improvement.

“It was a significant miss,” said Bruce McCain, who helps oversee more than $20 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland. “To those who have been banking on additional Fed money to justify their investments, it will be an encouragement.”

Biggest Gains

Commodity and financial shares led gains among the 10 groups in the MSCI Emerging Markets Index. The broad gauge has dropped 9.5 percent this year, compared with a 15 percent increase in the MSCI World Index.

The iShares MSCI Emerging Markets Index exchange-traded fund was little changed at $39.71. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, slumped 5.4 percent to 20.84.

Brazil’s Ibovespa (IBOV) erased gains as oil producer OGX slumped 12 percent, the biggest drop on the emerging markets gauge. The real pared this week’s loss after the central bank intervened to support the currency.

Mexico’s IPC index rose, led by Industrias Penoles SAB, while Desarrolladora Homex SAB tumbled after surging 63 percent over the previous two days.

Russian stocks capped a second consecutive weekly loss as oil, the nation’s chief export, slid. United Co. Rusal, the world’s biggest aluminum company, dropped 3.4 percent. Fertilizer company OAO Acron slipped 1.1 percent.

Poland, Turkey

Poland’s WIG20 Index (WIG20) jumped 2.2 percent, for the biggest gain among emerging-market gauges. PKO Bank Polski SA, Poland’s biggest lender, surged to a two-year high. Benchmark measures in the Czech Republic and Turkey added at least 0.8 percent.

Most Chinese stocks advanced as property companies rose amid growing speculation that the government may relax curbs on the industry as economic growth slows. Xinhu Zhongbao Co. rallied as it resumed trading for the first time in a month after the company’s board said it plans to seek regulatory approval for a private share placement.

India’s S&P BSE Sensex (SENSEX) extended this week’s drop to 3 percent, the most since five days ended March 24. Jindal Steel & Power Ltd. (JSP) plunged 7.6 percent, leading a gauge of 10 metal companies to its lowest close in more than four years. ICICI Bank Ltd. fell to an 11-month low, pacing losses among its peers. The rupee slid 1.1 percent, capping its biggest weekly drop in almost two years.

The Philippine Stock Exchange Index declined 1.9 percent, the lowest since July 11. SM Investments, the country’s biggest company by market value, sank 8.6 percent after selling shares at a discount, the sharpest loss since October 2008.

The premium investors demand to own emerging-market debt over U.S. Treasuries rose 0.09 percentage point to 327 basis points, according to JPMorgan Chase & Co.

To contact the reporters on this story: Lyubov Pronina in London at lpronina@bloomberg.net; Julia Leite in New York at jleite3@bloomberg.net; Jessica Summers in New York at jsummers17@bloomberg.net

To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net

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