Developing-nation stocks gained, sending the benchmark index higher for a sixth day, as Italian Prime Minister Mario Monti’s proposal to cut the nation’s debt increased investor appetite for riskier emerging-market assets.
The MSCI Emerging Markets Index rose 0.6 percent to 966.35 at the close in New York, extending a 9.5 percent rally last week. Brazil’s Bovespa Index gained 1.8 percent to the highest level in almost a month. The Shanghai Composite Index declined 1.2 percent after a report that China’s non-manufacturing industries contracted last month.
Developing-market shares rose as much as 0.7 percent before dropping on news that Standard & Poor’s was poised to put European nations on watch for potential downgrades. S&P made the official announcement after the close of New York trading.
Monti lobbied Italy’s parliament to support a 30 billion-euro ($40 billion) package of austerity and growth measures to help reduce the euro area’s second-biggest debt and prevent a breakup of the currency union. German Chancellor Angela Merkel and French President Nicolas Sarkozy pushed for a rewrite of the European Union’s governing rules to tighten economic cooperation in a demonstration of unity on ending the debt crisis.
“Italy backed relatively swiftly the new government to put in an austerity measure and demonstrate moving forward in terms of meeting requirements put in place by the European Union,” said Tim Schroeders, who helps manage $1 billion in equities at Pengana Capital Ltd. in Melbourne.
MSCI’s emerging-market index has dropped 16 percent this year as concerns over the European debt crisis and U.S. economic growth prompted fund managers to seek less risky investments.
The Bovespa stock index extended its first weekly gain in five after economists cut their forecasts of Brazilian interest rates and inflation for 2012. Port developer LLX Logistica SA led gains, soaring 10 percent, after saying it signed a leasing contract with Intermoor do Brasil Servicos Offshore de Instalacao Ltda. that will generate annual revenue of about 3.6 million reais ($2 million).
Chinese non-manufacturing industries, including retail, construction and property, contracted for the first time since February, according to a November purchasing managers’ index. Developers and producers of construction materials led Chinese stock declines after the central bank said developers are facing tighter credit conditions.
The PMI data is “a concern for the market because China clearly is a major demand source for commodity products in the world,” Joseph Tan, Singapore-based chief economist for Asia at Credit Suisse Group AG’s private-banking division, said in a Bloomberg Television interview.
Most emerging-market currencies rose against the dollar today, with the Hungarian forint rising 1.2 percent and the Mexican peso advancing 0.7 percent. The Indian rupee fell 0.4 percent.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell five basis points, or 0.05 percentage point, to 404, according to JPMorgan Chase & Co.’s EMBI Global Index.