Emerging Stocks Fall on Data as Brazil Leads World Losses

Emerging-market stocks fell to a five-month low as a manufacturing slowdown in China and the U.S. bolstered concern global growth will falter. Brazil’s Ibovespa led losses in world equities as Petroleo Brasileiro SA tumbled.

The MSCI Emerging Markets Index dropped 1.1 percent to 926.74, the lowest since Aug. 29. Brazil’s Ibovespa posted the biggest decline among the 94 global equity gauges tracked by Bloomberg as oil producer Petrobras sank to an eight-year low. Turkey’s lira extended its worst start to a year since 2009 after inflation quickened to the highest level in three months. Ukrainian bonds rallied on speculation the European Union will offer financial aid to rival emergency loans from Russia.

Stocks slumped after data showed U.S. factories expanded in January at the weakest pace in eight months as orders slumped, a sign manufacturing cooled at the start of the year along with the weather. Chinese manufacturing retreated to a six-month low amid a slowdown in output, adding to concern that government efforts to rein in excessive credit will cool growth.

“When both the U.S. and China show slowing growth in manufacturing, it’s a really big deal,” Paul Zemsky, the head of multi-asset strategies at ING U.S. Investment Management, which oversees $200 billion, said by phone from New York. “There is no place in the world right now that investors are comfortable about economic growth.”

All 10 groups in the measure for developing-nation equities decreased, led by commodity and consumer discretionary companies. The iShares MSCI Emerging Markets Index exchange-traded fund fell 2.8 percent to $37.11 today. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, advanced 7.8 percent to 31.16.

Brazil, Russia

Brazil’s Ibovespa dropped to the lowest level since July as Petrobras sank 5.8 percent. Water utility Cia. de Saneamento Basico do Estado de Sao Paulo plunged after offering a 30 percent discount to customers who reduce consumption.

Russia’s benchmark stock gauge extended its worst start to the year since 2008, led by energy companies. OAO Gazprom fell for a third day, sliding 2.4 percent. The ruble strengthened after money-market rates rose to the highest in more than two years, making it more expensive to bet against the currency.

Ukrainian bonds rebounded as Western nations consider new aid for the east European country after Russia suspended its bailout program last week. The European Union is discussing “if we can do something more in this particular phase,” European Commission President Jose Barroso said in Brussels today. Ukraine needs “real financial help” to end its crisis, Arseniy Yatsenyuk, the head of the opposition Batkivshchyna party, said in a statement.

Turkey’s Currency

Turkey’s lira depreciated as much as 1.3 percent. It lost 5 percent in January as a corruption scandal that forced three ministers to resign hurt investor confidence.

India’s benchmark stock index dropped to a 12-week low, led by metal and automobile producers. Hindalco Industries Ltd. (HNDL) fell 5.6 percent, sending a gauge of metalmakers to a three-month low. Bajaj Auto Ltd. (BJAUT) had its biggest loss in more than five months, pulling the S&P BSE India Auto Index to its lowest level in four months. ICICI Bank Ltd. (ICICIBC) slid 2.5 percent, driving an industry gauge to a four-month low.

Thailand’s baht rose the most in three weeks and stocks gained after voters defied protesters’ efforts to disrupt polls and cast ballots across 90 percent of the country yesterday without triggering major violence.

The premium investors demand to own emerging-market debt over U.S. Treasuries rose eight basis points, or 0.08 percentage point, to 367 basis points, according to JPMorgan Chase & Co.

To contact the reporters on this story: Elena Popina in New York at epopina@bloomberg.net; Maria Levitov in London at mlevitov@bloomberg.net; Ian Sayson in Manila at isayson@bloomberg.net

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

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