By Laura Cochrane and Michael Patterson
April 9 (Bloomberg) -- Emerging-market stocks rose and headed for their longest stretch of weekly gains in a year as energy companies climbed on higher oil prices and speculation mounted government aid will revive economic growth.
Russian, Taiwanese and Hungarian equities helped drive the MSCI Emerging Markets Index up 3.7 percent to 632.47 at 11:24 a.m. in New York. The gauge rose 3.1 percent this week and was poised for the highest close in almost six months. Bonds rallied from Turkey to Brazil and Indonesia while the South Korean won led advances in developing-nation currencies against the dollar.
“There has been more risk-taking appetite generally and people have become more comfortable with the stock market gains off the recent lows,” said Dmitry Gourov, an economist at UniCredit SpA in Vienna.
Emerging-market stocks have surged 33 percent from this year’s low on March 2, paring losses in the past 12 months to 45 percent, as oil climbed and Group of 20 leaders pledged to triple the lending stockpile of the International Monetary Fund to $750 billion. The lender has already allocated more than $70 billion to help emerging economies including Hungary, Pakistan and Romania to avoid default.
“This package has been a definite confidence-building measure,” Gourov said today in a phone interview.
This week’s gains would extend a five-week rally for the MSCI developing-nation index, the longest rise since the six- week period ended May 2. Markets from Warsaw to Johannesburg and Mumbai will be closed tomorrow for holidays.
‘Bear Market Rally’
The surge in stocks since March is a “bear market rally” and equities may retreat as a global recession persists, Aberdeen Asset Management Plc’s Hugh Young and BlackRock Inc.’s Dan Chamby said this week. The number of Americans filing first- time claims for unemployment insurance exceeded 600,000 for a 10th straight week, a sign the labor market remains weak, the Labor Department said today. Industrial production in Germany dropped for a sixth month in February, the Economy Ministry said.
The MSCI index, up 11 percent this year, extended gains after Wells Fargo & Co., the second-biggest U.S. home lender, said its first-quarter earnings will top analysts’ estimates. The Micex Index in Russia, the world’s biggest energy-exporting economy, advanced 10 percent as state-owned oil pipeline OAO Transneft jumped 21 percent. Brazil’s Bovespa index added 2.9 percent as Petroleo Brasileiro SA gained 3.4 percent.
Oil advanced as much as 6 percent to $52.35 a barrel, and higher copper, aluminum and zinc prices improved outlooks for emerging markets relying on exports.
Japan Stimulus
Asian stocks gained on speculation Japan will unveil a $154 billion stimulus package to help revive the economy, according to a document obtained by Bloomberg News, adding to optimism efforts by governments around the world will pull the global economy out of its worst recession since World War II. Taiwan’s benchmark Taiex index surged 3.5 percent to the highest in six months.
Emerging-market equities may climb as much as 15 percent in the “next few weeks,” tracking a pattern seen during the stocks’ initial rebound from the bear market that ended in 2001 Jonathan Garner, Morgan Stanley’s London-based chief Asian and emerging-market strategist, wrote in a research note.
An increase in bonds reduced yields by 15 basis points to 5.58 percentage points over U.S. Treasuries, according to JPMorgan Chase & Co.’s EMBI+ Index. Both gauges are set for their fifth week of gains. A basis point is equal to 0.01 percentage point.
Turkey, Brazil Bonds
The spread between yields on Turkey’s bonds and Treasuries narrowed 27 basis points to a more than six-month low of 4.33 percentage points, according to JPMorgan indexes, on speculation the government is near an agreement with the IMF on a loan and the country’s central bank will cut interest rates more than forecast.
The yield spread on Brazil’s bonds fell 10 basis points today to 3.66 percentage points, while the nation’s currency, the real, appreciated 1 percent to 2.1808 per dollar.
The Czech koruna climbed as much has 0.16 percent against the euro. The koruna will be the “clear outperformer” among eastern European currencies for the next 12 months as the region starts to recover from the global credit crisis, Goldman Sachs Group Inc. analysts said.
“Though we see some further currency weakness in the next three months, relative to the spot levels, we have moved our forecasts stronger across the board,” Rory MacFarquhar, a Goldman Sachs economist in Moscow, wrote in a note to clients today.
To contact the reporter on this story: Laura Cochrane in London at lcochrane3@bloomberg.net
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