Emerging-market stocks advance on Greece deal hopes

Emerging-market stocks rose to a six- month high as investors bet Greece will reach an agreement for a second bailout, decreasing the risk Europe’s debt crisis will drag down global growth.

The MSCI Emerging Markets Index advanced 0.1 per cent to 1048.56 at the close in New York, the highest since August 4. Brazil’s Bovespa index rose to a nine-month high. The Shanghai Composite Index slipped 1.7 per cent, the biggest drop in three weeks. Russia’s Micex Index retreated 0.9 per cent, and the FTSE/JSE Africa All Share Index fell 0.6 per cent in Johannesburg to the lowest since January 31.

Greek Prime Minister Lucas Papademos was to meet tonight with officials from the European Commission, the European Central Bank, and the International Monetary Fund to discuss the final details of terms for a €130 billion ($172bn) rescue package. He postponed until tomorrow a meeting with the heads of the political parties supporting his caretaker government.

“Our European economists now believe that an agreement on Greece is almost a done deal, which when confirmed, will provide a positive boost to sentiment,” Benoit Anne, head of emerging- markets strategy at Societe Generale SA in London, wrote in a message to clients. “There is more room for global emerging markets to rally.”

A Greek official said earlier the government and international creditors were close to a final draft of an agreement on budget and structural measures needed to extend the financial lifeline.

Growth in Chinese industrial output will probably decline this quarter as the global economy slows and the European debt crisis continues, the Industry and Information Technology Ministry said today.

A “hard landing” for China is a key global risk, Fitch Ratings said today after the International Monetary Fund warned yesterday that a worsening of Europe’s debt crisis could cut growth in the world’s fastest growing major economy almost in half from a forecast of 8.2 per cent for this year.

“China’s industry development is facing an increasingly complex domestic and international environment with increased unstable and uncertain factors,” the Industry and Information Technology Ministry said in a statement.

The Bovespa index rose 1.1 per cent in Sao Paulo to the highest since April 29. Card-payment processor Redecard SA surged 10 per cent to the highest since November 2007, after parent Itau Unibanco Holding SA offered to buy all shares outstanding to delist the company. Competitor Cielo SA gained 4.2 per cent.

Palabora Mining Co Ltd, a South African copper producer majority owned by Rio Tinto Group and Anglo American Plc, dropped 7.8 per cent, ending the best four-month rally on the nation’s benchmark stock index. Palabora gained more than 68 per cent through yesterday’s closing price since reaching a one- year low on Oct. 4, more than any other stock over the period on the 162-member benchmark index.

The BUX Index sank 1.2 per cent in Hungary and the WIG20 Index slid 0.7 per cent in Warsaw, its first drop in nine days.

The euro gained 1 per cent against the dollar to the strongest since December 11. The forint rose 1 per cent versus the euro, and most emerging-market currencies tracked by Bloomberg strengthened against the dollar.

The iShares MSCI Emerging Markets Index exchange-traded fund of developing-nation stocks rose 0.2 per cent to $43.60.

The extra yield investors demand to own emerging-market debt over US Treasuries fell nine basis points, or 0.09 percentage point, to 382, according to JPMorgan Chase & Co’s EMBI Global Index.