Emerging Stocks Rally as Ruble Rebounds on Ukraine Cease-fire

Emerging-market stocks rallied to a three-year high and the ruble led gains in currencies on optimism the conflict in eastern Ukraine will ease after the nation’s leader and Russia agreed on steps toward a cease-fire.

The Micex Index climbed 3.5 percent in Moscow, while equity gauges in Hungary and Poland both added at least 2.2 percent. OAO Gazprom, Russia’s natural gas export monopoly, surged the most since late June. The ruble ended a six-day rout. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong increased to the highest level this year. The Ibovespa fell for the second time in three days, led by the Brazilian state-run oil company Petroleo Brasileiro SA.

The MSCI Emerging Markets Index gained 1.3 percent to 1,100.98, the highest since August 2011. Ukraine’s Petro Poroshenko reached a deal on ending hostilities after a phone call with Russian President Vladimir Putin over unrest in Ukraine’s east, he said on his website. Kremlin spokesman Dmitry Peskov said Putin largely agreed on the steps needed for a truce, while reiterating the country isn’t directly involved in the conflict.

“Any mutual cease-fire is good news and the market is going to react positively,” Neil Shearing, chief emerging-markets economist at Capital Economics Ltd., said by phone from London. “This is clearly a step in the right direction.”

The ruble appreciated 1.6 percent versus the dollar, the steepest increase among the world’s currencies. Ukraine’s benchmark UX Index rose 1 percent to the highest since Sept. 1.

Positive Mood

Ukraine, the U.S. and the European Union have accused Russia of dispatching soldiers and backing pro-Russian rebels in a conflict the United Nations estimates has killed at least 2,600 people.

Russia, which was facing further sanctions as early as this week over the unrest, has repeatedly denied involvement. U.S. President Barack Obama said “we must stand united against Russia’s aggression in Ukraine,” in a speech today in in Tallinn, Estonia, after the cease-fire agreement was announced.

“The mood is definitely positive but there’s no absolute certainty that the cease-fire will lead to a final resolution of the conflict,” Igor Lavrentiev, a fund manager at Libra Capital Investment Co. in Moscow, said by e-mail.

The Ibovespa declined 0.1 percent in Sao Paulo as Petroleo Brasileiro dropped 2.4 percent. The Brazilian benchmark traded at 12.1 times estimated earnings yesterday, the highest valuation in 10 months. Stocks fell amid speculation the recent rally might have been excessive given the outlook for the economy.

Currencies Rebound

The developing-nation gauge has gained 9.8 percent this year and is valued at 11.5 times projected 12-month earnings, data compiled by Bloomberg show. The MSCI World Index has risen 5.6 percent and trades at a multiple of 15.1. Russia’s dollar-denominated RTS Index today advanced 5.2 percent, the most among 94 primary stock gauges tracked by Bloomberg.

A gauge tracking developing-country currencies strengthened 0.3 percent, ending a four-day decline. The Hungarian forint appreciated 0.6 percent against the dollar. Data showed Hungary’s second-quarter gross domestic product grew 3.9 percent from a year earlier, matching preliminary estimates.

The premium investors demand to own developing-country debt over U.S. Treasuries narrowed one basis points to 277, according to JPMorgan Chase & Co. indexes.

The Shanghai Composite Index added 1 percent to the highest close since June 2013. An official non-manufacturing purchasing managers’ index for China’s services industry rose to 54.4 in August from 54.2 in July, while a similar gauge from HSBC Holdings Plc and Markit Economics jumped to 54.1 from 50.

All 10 industry groups in the MSCI Emerging Markets Index advanced today, led by energy and telecommunications stocks.