Emerging-market stocks rose for the first time in three days as smaller Chinese companies rallied and optimism that central-bank support will continue for the euro-area economy boosted eastern European markets.
The MSCI Emerging Markets Index added 0.4 percent to 941.69. East Money Information Co. and Jiangsu Hengrui Medicine Co. climbed more than 3.5 percent in Shanghai as China’s main gauge ended a two-day decline. India’s equity benchmark rose to a three-month high. Brazil’s real slumped as prosecutors said former President Luiz Inacio Lula da Silva is being investigated for influence peddling.
European Central Bank President Mario Draghi said policy makers will use “all the instruments available” to spur growth if the euro-area economy shows weakness. The region’s finance ministers agreed to extend a bridge loan to Greece after the country endorsed an austerity package. In China, the government maintained measures to support stocks after a $4 trillion rout. In Washington on Wednesday, Federal Reserve Chair Janet Yellen said interest-rate policy will remain supportive of growth after a potential first increase this year.
“China’s heavy handed actions have clearly settled down the local market at least temporarily,” Joseph Dayan, the head of markets at BCS Financial Group in London, said by e-mail. “Yellen has so far done a good job in communicating the possible timeframe for a lift-off in rates.”
The emerging-markets index touched a two-year low last week as concern over valuations and trading driven by record levels of margin lending led to a 32 percent slump in the Shanghai Composite Index in less than four weeks through July 8. The developing-nation gauge trades at 11.6 times the projected earnings of its members, compared with a multiple of 16.6 for an MSCI gauge of advanced-nation shares.
Speaking in Frankfurt, Draghi sought to draw a line under Greece’s debt crisis, pledging further bank funding and confirming the nation’s place in the euro. Policy makers also agreed to increase emergency liquidity for the nation, marks a turning point in the most recent incarnation of its five-year turmoil, where rising political tension had led to deposit flight and tighter controls on banks.
European finance ministers further agreed in principle to extend a bridge loan to Greece to keep the country afloat as it negotiates the details of a three-year assistance of as much as 86 billion euros.
The WIG 20 Index in Warsaw rose 1.8 percent to a two-week high. The PX Index in Prague rose for a sixth day, the longest streak this year. The BUX Index in Budapest climbed to the highest level since May. The BET Index in Bucharest advanced to a six-week high. Investors bet that the ECB’s support to boost inflation and sustain the economic recovery in the euro area will help eastern European nations that derive most of their trade from that region.
The real weakened 0.5 percent against the dollar. Authorities are examining whether Lula used his influence to help construction company Odebrecht SA win contracts in Panama and Venezuela, a spokesman for the prosecutor’s office in Brasilia said. The investigation comes amid a broad corruption probe that has roiled Brazil’s financial markets.
The Shanghai Composite climbed 0.5 percent, erasing a loss of as much as 3.1 percent. A gauge of 100-day price swings has jumped to the highest level since March 2009 as more companies resume trading after suspending their shares during the recent rout. Still 673 stocks, or about 23 percent of all listings, remain halted on mainland exchanges. Hong Kong’s Hang Seng China Enterprises index gained 0.6 percent.
In South Korea, the Kospi index added 0.7 percent. Posco, the country’s biggest steelmaker, tumbled to a nine-year low after its second-quarter profit missed estimates. India’s S&P BSE Sensex rose 0.9 percent.
All but three of the 24 emerging-market currencies tracked by Bloomberg strengthened against the euro, with the Russian ruble gaining 0.6 percent and the Polish zloty climbing 0.4 percent. A gauge of 20 developing-nation exchange rates declined 0.3 percent.
The premium investors demand to own developing-nation debt over U.S. Treasuries narrowed two basis points to 349 basis points, according to JPMorgan Chase & Co. indexes.