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Emerging Stocks Slump as Turkish Lira Drops for 8th Day

Nov. 1 (Bloomberg) -- Emerging-market stocks fell, almost erasing a weekly gain, as Indonesia’s surprise trade shortfall outweighed data showing China’s manufacturing strengthened. Turkey’s lira capped the longest slide since 2002.

The MSCI Emerging Markets Index retreated 0.6 percent to 1,027.87. Indonesia’s rupiah had its worst week since August as data showed the nation’s trade balance unexpectedly swung back to a deficit. The lira paced losses in 22 out of 24 developing-nation currencies tracked by Bloomberg as Turkey’s central bank cut the amount of liquidity it gives to lenders in auctions of repurchase agreements. Poly Real Estate Group Co. drove gains in China on bets policy makers will ease property curbs.

Better-than-estimated economic data fueled bets the Federal Reserve will start tapering stimulus that has buoyed emerging markets sooner than previously expected. Manufacturing strengthened from the U.S. to China and South Korea last month in a sign that expansion may pick up this quarter. Indonesia’s exports declined for an 18th month and concern grew the nation’s current-account deficit will linger.

“Among emerging markets, the higher current-account deficit countries remain the most vulnerable to any tapering noise,” Simon Quijano-Evans, head of emerging-markets research at Commerzbank AG in London, said by e-mail.

Nine out of 10 groups in the MSCI Emerging Markets Index retreated today, led by energy and telephone shares. The broad measure trades at 10.5 times projected earnings, compared with the valuation of 14.3 for the MSCI World Index.

Emerging ETF

The iShares MSCI Emerging Markets Index exchange-traded fund rose 0.1 percent to $42.48. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, lost 0.7 percent to 21.67.

Brazil’s Ibovespa fell to a three-week low as homebuilders including Gafisa SA tumbled after slower-than-forecast industrial production rekindled concern that Brazil’s economy is faltering. Vale SA rose to a seven-week amid signs that manufacturing is picking up in China, the iron-ore producer’s top export market.

Russian stocks extended a weekly advance after Chinese manufacturing improved and OAO GMK Norilsk Nickel, the world’s biggest producer of the metal, gained. Oil producer OAO Surgutneftegas added 1.9 percent.

The Borsa Istanbul National 100 Index tumbled 1.4 percent, led by Turkiye Garanti Bankasi AS. The lira dropped for an eighth day, the longest stretch of declines since May 2002.

China, India

Chinese stocks rose, capping a weekly advance in the Shanghai Composite Index, as a gauge of manufacturing beat estimates and investors speculated policy makers may ease property curbs. China Oilfield Services Ltd. and Yanzhou Coal Mining Co. paced gains among energy companies. China Merchants Bank Co. advanced 1.6 percent and Poly Real Estate Group Co. climbed for a third day.

India’s S&P BSE Sensex rose to a record as better-than-estimated corporate earnings spurred foreign investors to step up purchases of the nation’s equities. State Bank of India climbed to its highest level in three months, sending a measure of 13 lenders to a fourth day of gains.

The rupiah slid 0.6 percent to 11,333 per dollar as of 4:11 p.m. in Jakarta, prices from local banks show. The currency has fallen every day this week to drop 2.8 percent from Oct. 25, the most since the five days ended Aug. 23.

The premium investors demand to own emerging-market debt over U.S. Treasuries fell four basis points, or 0.04 percentage point, to 310 basis points, according to JPMorgan Chase & Co.

To contact the reporters on this story: Lyubov Pronina in London at lpronina@bloomberg.net; Julia Leite in New York at jleite3@bloomberg.net

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

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