Emerging Stocks Rise First Day This Week; Currencies Strengthen

Emerging-market stocks climbed for the first time in five days, rebounding from an almost three-month low, as concern eased that inflation will derail the global economic recovery.

The MSCI Emerging Markets Index advanced 1.1 percent to 1,099.46, paring this week’s loss to 2 percent. Automakers and airlines including Tata Motors Ltd. and Turk Hava Yollari AO climbed after oil slipped to $97.88 a barrel in New York from yesterday’s intraday high of $103.41. Currencies strengthened, with the ruble rising to the highest level since November 2009 after Russia unexpectedly increased interest rates.

The U.S., Saudi Arabia and the International Energy Agency said they could offset any supply disruptions from Libya, as the prospect of a civil war there pushed crude prices to the highest level since 2008 this week. U.S. President Barack Obama said yesterday the world’s largest economy will be able to “ride out” a cut in fuel supplies, and a report today showed consumer confidence rose to the highest level in three years.

“There are still uncertainties and geopolitical risk in the Middle East, though we view the current correction as an opportunity to buy on weakness,” said Jason Chong, who helps manage about $900 million of assets as chief investment officer at Manulife Asset Management (Malaysia) Sdn. in Kuala Lumpur.

The MSCI emerging index traded at 13.5 times reported profits yesterday, the lowest level since July 19, according to data compiled by Bloomberg. That compares with the 14.9 price-to-earnings ratio for the MSCI World Index of advanced-nation shares, the data show.

Automakers, Airlines

The extra yield investors demand to own emerging-market debt over U.S. Treasuries declined five basis points, or 0.05 percentage point, to 2.74 percentage points today, the first drop this week, according to JPMorgan Chase & Co.’s EMBI+ Index. The Markit iTraxx SOVX CEEMEA Index of credit-default swaps for emerging Europe, the Middle East and Africa fell three basis points to 211, according to data provider CMA in London.

Tata Motors, the owner of Jaguar Land Rover, jumped 5.3 percent in Mumbai and Turk Hava, known as Turkish Airlines, surged 6.5 percent in Istanbul. Korean Air Lines Co., South Korea’s largest carrier, rallied 4.8 percent in Seoul.

Saudi Arabia and other OPEC nations including those in West Africa are willing and able to replace any lost Libyan oil as soon as companies ask for it, including crude of the same quality, a Saudi Arabian oil official said yesterday, declining to be identified by name.

The IEA said it’s ready to release emergency oil stockpiles, if needed. The Paris-based agency, founded in 1974 in response to the Arab oil embargo, advises 28 developed nations, including the U.S., Japan and Germany.

Russian Rates

The ruble climbed 0.4 percent to 28.8913 per dollar.

Bank Rossii raised its main rates by 0.25 percentage point, boosting the refinancing rate to 8 percent and the overnight deposit rate to 3 percent. Economists expected the refinancing rate to be left unchanged and the deposit rate to rise, according to the median estimate in a Bloomberg survey.

Russian equity mutual funds attracted inflows for a 13th straight week in the period ended Feb. 23, even as global emerging-market funds had outflows of $1.9 billion, according to UralSib Financial Corp. The Micex Index of Russian shares climbed 1.9 percent today.

Indonesia moved closer to attaining an investment grade rating after Fitch Ratings raised its outlook on the sovereign to positive from stable and affirmed its BB+ grade on Indonesia’s local and foreign-currency debt, one step below investment grade. An upgrade will put Indonesia on par with India and Brazil.

Brazilian Stocks

The Jakarta Composite index advanced 0.1 percent, paring its weekly loss to 1.7 percent.

Brazilian stocks fell for the first day in three, retreating 0.1 percent. HRT Participacoes em Petroleo SA, the Brazilian oil and gas company, fell the most in two weeks after it was cut to “underperform” from “buy” at Banco Santander SA.

Colombian policy makers unexpectedly raised their benchmark interest rate today for the first time in 10 meetings as they seek to slow accelerating domestic demand. The peso dropped 0.4 percent to 1,907.15 per U.S. dollar. It slid 1.6 percent this week, its biggest decline since the period ended Dec. 17.

Confidence among U.S. consumers increased in February as a drop in unemployment helped overcome concern over rising food and fuel costs. The Thomson Reuters/University of Michigan final index of sentiment climbed to 77.5, exceeding the median forecast of economists surveyed by Bloomberg, from 74.2 in January.

The Hang Seng China Enterprises Index of shares traded in Hong Kong gained 1.8 percent, while the Shanghai Composite Index was little changed.

Chinese Inflation

Industrial & Commercial Bank of China Ltd., the world’s largest bank by market value, advanced 2.4 percent in Hong Kong. Chinese inflation may have slowed to 4.8 percent in February from 4.9 percent the previous month, China International Capital Corp. and Shenyin & Wanguo Securities Co. said in reports today.

“As we get into the back half of the year, some of the near-term cyclical inflation we’re seeing right now in China, Brazil and most other emerging markets will start to abate,” Russ Koesterich, the San Francisco-based head of investment strategy for scientific active equities at BlackRock Inc., said in an interview on Bloomberg Television.

Turkey’s ISE National 100 Index gained 1 percent, while Hungary’s BUX advanced 2.3 percent. Poland’s WIG20 increased 0.7 percent and the Czech PX Index climbed 0.3 percent. India’s Bombay Stock Exchange Sensitive Index increased 0.4 percent.

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