Emerging-Market Stocks Advance to Seven-Week High; Bonds Climb

Emerging-market stocks advanced, sending the benchmark index to a seven-week high, as rising metals prices boosted mining companies and Chinese banks rallied on a report that profit climbed this year.

The MSCI Emerging Markets Index increased 0.8 percent to 1,134.45 at 8:24 a.m. in New York, the highest level on a closing basis since Nov. 11. Developing-nation bonds rose, sending the extra yield on the debt over Treasuries down 8 basis points to 2.29 percentage points, JPMorgan Chase & Co.’s EMBI+ Index showed. Taiwan’s dollar rose to a 13-year high while the Polish zloty gained for the first time in four days.

KGHM Polska Miedz SA and Zijin Mining Group Co. shares rallied as copper rose to a record in London on speculation faster economic growth next year will support demand for industrial metals. China Construction Bank Corp. climbed for the first time in five days after the China Securities Journal reported the banking industry may have 800 billion yuan ($120 billion) of profit this year, up from 668 billion yuan in 2009.

“Chinese banks will show earnings growth for this year,” said Steve Tse, a research manager at BEA Union Investment Management in Hong Kong. Commodity companies “are in favor,” he said.

The MSCI emerging-market index has increased 15 percent this year, following a record 75 percent rally in 2009. The JPMorgan gauge of developing-nation debt has returned 12 percent, while currencies including the South African rand, Malaysian ringgit, Thai baht and Taiwanese dollar have strengthened more than 8 percent against the U.S. currency.

China Rally

China’s Hang Seng China Enterprises Index rallied from a three-month low, climbing 1.6 percent. OAO GMK Norilsk Nickel led gains in Russian shares, rising 3.4 percent in Moscow on plans to buy back as much as $4.5 billion of stock. South Korea’s Kospi Index advanced 0.5 percent to the highest level since November 2007 after a gauge of manufacturers’ confidence rose for the first time in four months.

Copper for delivery in three months rose as much as $101, or 1.1 percent, to an all-time high of $9,447 a metric ton in London. In a sign of limited supplies, the price for immediate delivery copper was $53 higher than the three-month price. The exchange was closed the past two days because of holidays.

KGHM, the Polish copper producer with the biggest European mine output, increased 1.1 percent and was poised to close at a record. China’s Zijin Mining advanced 2.2 percent in Hong Kong.

Share Buyback

Norilsk Nickel shares jumped to the highest level on a closing basis since May 2008. The Moscow-based mining company offered to purchase $3 billion of stock in a public tender by Jan. 21, and $1.5 billion over the next year from the market, Norilsk President Andrei Klishas told reporters today in the Russian capital.

Taiwan’s dollar appreciated 0.4 percent against the U.S. currency on expectations the Asian nation’s central bank will raise interest rates. The discount rate on 10-day loans will be lifted by 12.5 basis points to 1.625 percent at a policy meeting tomorrow, according to all 14 economists in a Bloomberg survey.

Borrowing costs were increased by similar amounts in June and September, and the current level of 1.5 percent compares with an inflation rate of 1.53 percent.

“The market is quite certain the central bank will raise rates tomorrow,” said Tarsicio Tong, a Taipei-based currency trader at Union Bank of Taiwan. “Real interest rates are still in negative territory.”

The zloty strengthened 0.6 percent versus the euro after state-owned lender Bank Gospodarstwa Krajowego sold the common currency, according to three traders involved in the transactions who declined to be identified because the information isn’t public.

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