Emerging Stocks Pare Weekly Decline on China Output Data

Emerging-market stocks advanced, trimming the longest weekly slide since June, as commodity producers from Brazil to Russia rallied after data showed Chinese industrial production beat economists’ estimates.

The MSCI Emerging Markets Index increased 0.5 percent to 951.37, paring its weekly decline to 0.4 percent. Brazil’s Ibovespa (IBOV) climbed to an eight-week high as mining company MMX Mineracao e Metalicos SA surged 10 percent, while steelmaker OAO Severstal drove Russia’s Micex Index (INDEXCF) to the first gain in six days. Mexico’s IPC index slid amid a slump in industrial output and after Carlos Slim’s America Movil SAB tumbled on plans to buy the rest of Royal KPN NV for about $9.6 billion.

Stocks joined a rally in commodities as the acceleration in Chinese output may bolster confidence the nation will avoid a deeper economic slowdown after a rebound in exports and imports and improvement in manufacturing and service industries. The measure of emerging-market shares still dropped a second week as concern grew that global central banks will start paring stimulus amid better-than-estimated economic data.

“The data overall for China has been better this past week,” Paul Zemsky, the New York-based head of asset allocation for ING Investment Management which oversees $180 billion, said by phone. “It’s just a huge indicator of overall health of emerging market economies. If China is doing better, the presumption is that those economies will pick up as well.”

Commodity Shares

Shares of commodity producers added at least 1.1 percent to lead gains among 10 groups in the MSCI Emerging Markets Index. The broad gauge trimmed this year’s drop to 9.8 percent, compared with a 14 percent surge in the MSCI World Index.

The iShares MSCI Emerging Markets Index exchange-traded fund added 0.2 percent to $39.36. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, retreated 1.1 percent to 22.81.

Brazil’s Ibovespa led gains among major emerging-market gauges amid signs of an acceleration in China, the nation’s top trading partner. Mining company MMX and port developer LLX Logistica SA surged at least 8.5 percent. Brazil’s real posted the biggest advance among 15 out of the 24 developing-nation currencies tracked by Bloomberg.

Mexican shares retreated, sending the IPC index down 0.1 percent. America Movil tumbled 5.6 percent.

The Micex Index trimmed its weekly decline to 0.7 percent. Severstal added 6.6 percent. Russia left its main lending rates unchanged for an 11th month while signaling increased concern about economic growth. The nation’s economy unexpectedly slowed in the second quarter to extend a slide that’s threatening to push the world’s largest energy exporter near recession.

Chinese Data

China’s stocks rose, capping a third week of gains for the benchmark index, as material producers rose. Jiangxi Copper Co. (600362) and Aluminum Corp. of China Ltd., the nation’s biggest producers of copper and aluminum, climbed at least 2.5 percent. The yuan had the biggest weekly gain since May after the central bank raised the currency’s reference rate for a fifth day.

The premium investors demand to own emerging-market debt over U.S. Treasuries was unchanged at 329 basis points, according to JPMorgan Chase & Co.

To contact the reporters on this story: Zahra Hankir in Dubai at zhankir@bloomberg.net; Jessica Summers in New York at jsummers17@bloomberg.net; Julia Leite in New York at jleite3@bloomberg.net

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

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