Developing-nation stocks fell as the Shanghai Composite Index erased its 2012 advance on concern China’s economic slowdown will choke earnings and as a two-day summit for European Union leaders started in Brussels.
The MSCI Emerging Markets Index declined 0.7 percent to 906.71 by the close in New York, snapping two days of gains. The Shanghai Composite fell 1 percent, the seventh straight slide in its longest losing streak in 13 months. OGX Petroleo e Gas Participacoes SA and MMX Mineracao e Metalicos SA slumped to lead decliners on Brazil’s Bovespa index. Russia’s Micex Index retreated 1.7 percent, the most since May 23.
China’s curbs on the housing market will remain “tight” this year, preventing transactions and prices from rebounding significantly, Shui On Land Ltd. Chief Executive Freddy Lee said yesterday. European Union leaders approved a 120 billion-euro ($149 billion) plan to promote growth in the 27-nation bloc. The growth plan came before leaders took on the thornier measures to prevent the euro area’s financial crisis from swamping Spain and Italy.
“The global markets backdrop remains quite challenging, given the persisting risks on the euro zone crisis front, as well as rising concerns that the global growth outlook may have to be substantially downgraded again,” Benoit Anne, head of emerging-markets strategy at Societe Generale in London, wrote in an e-mailed note to clients.
German unemployment climbed in June for the fourth month this year, the Bundesbank said. Jobless claims in the U.S. last week hovered near the highest level of the year, showing little improvement in the labor market of the world’s largest economy. Crude for August delivery declined 3.1 percent on the New York Mercantile Exchange to the lowest settlement since October.
The MSCI gauge measure has plunged 13 percent this quarter, heading for the biggest drop since the three months to September, amid concerns Europe’s debt crisis is worsening and China’s economic slowdown is deepening.
The IShares MSCI Emerging Markets Index exchange-traded fund, the most-traded ETF tracking developing-nation shares, slumped 0.5 percent to $37.47.
The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, rose 0.8 percent to 28.65.
The Micex Index tumbled 1.7 percent in Moscow as OAO Gazprom, Russia’s natural-gas export monopoly, declined 2.1 percent.
The Bovespa slid 0.9 percent, with OGX, the Brazilian oil company led by billionaire Eike Batista, tumbling 19 percent. The company cut production targets at its first two oil wells by as much as 75 percent this week. Iron-ore producer MMX Mineracao, another Batista company, sank 17 percent, the most since November 2008, and was the second-biggest loser on the MSCI emerging-markets gauge.
China, South Africa
The Shanghai Composite has retreated 0.2 percent so far this year. The Hang Seng China Enterprises Index of Chinese companies listed in Hong Kong sank 1.3 percent to the lowest close since Oct. 21.
The FTSE/JSE Africa All Share Index lost 1.5 percent in Johannesburg as Naspers Ltd., Africa’s largest media business, fell 4.9 percent, heading for its steepest decline since May 21.
The ISE National 100 Index retreated 0.6 percent in Turkey. Eregli Demir & Celik Fabrikalari TAS, Turkey’s biggest flat steelmaker tumbled 7 percent after Goldman Sachs Inc. rated it sell. The WIG20 Index fell 1.7 percent in Warsaw.
Felda Global Ventures Holdings Bhd. jumped 16 percent in its Malaysian debut after a $3.3 billion initial share sale.
The Malaysian state-controlled company, the world’s third-largest oil-palm plantation operator, is headed for the best first day of all initial public offerings above $500 million globally this year, according to data compiled by Bloomberg.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries rose three points, or 0.03 percentage point, to 389 basis points, according to JPMorgan’s EMBI Global Index.