Emerging Stocks Set for Weekly Loss on Iraq as Ibovespa Tumbles

Emerging-market stocks posted a second weekly loss on concern the worsening crisis in Iraq will thwart the global recovery. The Ibovespa fell as a poll showed Brazilian President Dilma Rousseff winning in a possible election runoff.

Samsung Electronics Co. declined to a four-month low in Seoul, while equity gauges in Poland and India decreased at least 0.7 percent. Russian equities rebounded and the ruble pared losses after state news wire RIA Novosti reported that the country is ready to mediate between Ukraine and rebels, citing Security Council head Nikolai Patrushev.

The MSCI Emerging Markets Index lost 0.4 percent to 1,046.55, taking the retreat this week to 1.3 percent. U.S. military aircraft conducted an airstrike on militant artillery in Iraq, Pentagon spokesman Admiral John Kirby said on Twitter.

“Geopolitics is weighing on the market, making investors more cautious,” Neil Shearing, the chief emerging-markets economist at Capital Economics, said by phone from London.

The index of developing stocks has advanced 4.4 percent this year and trades at 10.9 times 12-month projected earnings, data compiled by Bloomberg show. The MSCI World Index has gained 1.7 percent in the period and is valued at a multiple of 14.6.

Obama said yesterday he authorized the airstrikes as he dispatched planes to drop food and water for trapped civilians. The yield on Iraqi debt maturing in January 2028 climbed seven basis points to 7.48 percent, the highest since March.

Brazil, Russia

The Ibovespa fell 1.1 percent. Oil producer Petroleo Brasileiro SA declined 4.2 percent, leading a drop in Brazilian state-controlled companies as an Ibope poll showed that voter support for Rousseff held at 38 percent from last month.

The Micex Index jumped 1.1 percent, halting a three-day drop. The benchmark gauge has fallen 2.3 percent this month, pushing valuations to a three-month low, as Russia retaliated against U.S and European sanctions by banning some food imports.

Ukraine’s UX Index added 0.1 percent, trimming this week’s losses to 3.9 percent.

“The market is really tired of receiving one negative news item after another, and so is on the lookout for something positive,” Ivan Tchakarov, an economist at Citigroup Inc. in Moscow, said by e-mail.

Poland’s benchmark WIG30 Index fell 0.7 percent. Shares in the Czech Republic slipped 0.1 percent, paring a 1.3 percent decrease. Turkey’s main equity index added 0.5 percent.

Eight of 10 industry groups in the developing-nation gauge fell, led by technology and industrial companies. Samsung, the world’s largest smartphone maker, slumped 3.1 percent in Seoul.

The premium investors demand to own emerging-market debt over U.S. Treasuries fell one basis point to 295, JPMorgan Chase & Co. indexes show.

The Shanghai Composite Index added 0.3 percent, reversing earlier declines, while a gauge of mainland-traded shares in Hong Kong pared losses after China posted a record trade surplus in July as export growth unexpectedly accelerated.

Before it's here, it's on the Bloomberg Terminal.