Emerging Stocks Decline on Chaori Default as Vale Slumps

Emerging-market stocks dropped, almost erasing a weekly gain, as China’s first onshore default sparked concern that swelling bad debt will weigh on global growth. Vale SA led a slide in commodity shares as metals fell.

The MSCI Emerging Markets Index retreated 0.4 percent to 966.72. China’s benchmark equity gauge slipped as investors weighed the implications of Shanghai Chaori Solar Energy Science & Technology Co.’s bond default on the financial system. Vale led Brazil’s Ibovespa to a third week of losses as iron ore slumped into a bear market, while the real declined after data showed the nation posted a trade deficit.