Emerging-market stocks extended their best start to the year since 2001 after most countries in Europe agreed to tighter budget controls and Greece made progress on debt talks.
The MSCI Emerging Markets Index gained 1.5 percent to 1,021.45 as of 12:19 p.m. London time, heading for its strongest January in 11 years. The index has risen 11 percent this month after falling 20 percent in January of 2011. Taiwan’s Taiex Index advanced 1.5 percent as data showed global funds bought more of the island’s stocks in January. The BSE India Sensitive Index, or Sensex, climbed 2 percent. Benchmark indexes in Russia, South Africa and Turkey gained at least 0.6 percent.
European Union leaders, meeting in Brussels yesterday, completed a fiscal-discipline treaty that speeds sanctions on high-deficit states. Greek Prime Minister Lucas Papademos said he’s “strongly committed” to reaching a debt-swap pact with bondholders. U.S. consumer confidence strengthened this month and home prices in 20 U.S. cities fell at a slower pace in the year to November, economists said before reports today.
“I don’t think we should underestimate that what the markets want is a solution with the short-term financing problem,” Geoff Lewis, head of investment services at JPMorgan Asset Management, said in a Bloomberg Television in Hong Kong today. “Markets are not stupid. They know that there are long- term problems but that’s something to solve in the long term. What they need is liquidity.”
The Micex Index added 0.9 percent in Moscow as oil climbed more than 1 percent in New York. OAO Mechel, Russia’s biggest producer of steelmaking coal, jumped 3.7 percent and oil company OAO Surgutneftegas advanced 1.3 percent.
The FTSE/JSE Africa All Share Index rose for the first time in three days, rising 0.6 percent. Anglo American Plc, the diversified miner that accounts for 9 percent of the benchmark index, added 0.8 percent, and BHP Billiton Ltd., the world’s biggest miner, gained 1 percent.
The ISE National 100 Index rose 0.7 percent in Istanbul. The BUX Index gained 0.5 percent in Budapest and the WIG20 Index advanced 1.5 percent in Warsaw.
India’s Sensex has climbed 11 percent in January after slumping 25 percent last year. State Bank of India rose 3.5 percent after it approved selling stock to the government to bolster capital by 79 billion rupees ($1.6 billion).
In Taiwan, global funds bought $1.7 billion more stocks than they sold in January, the most in three months, exchange data showed. Foxconn Technology Co. jumped 6.9 percent to the highest level since Aug. 5, on speculation Apple Inc. may use metal casings for its next generation iPhone, benefiting companies including Foxconn. Cheng-Kuang Liu, a Taipei-based Foxconn spokesman, declined to comment on the speculation.
The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell nine basis points, or 0.09 percentage point, to 407 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index.
The Markit iTraxx SovX CEEMEA Index of eastern European, Middle East and Africa credit-default swaps fell eight basis points to 304 basis points, according to data provider CMA.
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