News Column

Global stocks continue gains

February 7, 2014

But Mobius warns the selloff in developing economies probably is not over

European shares rose for a third day and Standard & Poor's 500 Index futures advanced before US employment data. The euro weakened, German bonds gained and copper climbed for a second day.

The Stoxx Europe 600 Index increased 0.4 per cent at 7:15am in New York. S&P 500 futures jumped 0.3 per cent, signalling the gauge will trim its fourth consecutive weekly decline.

Emerging-market stocks advanced for a second day, trimming losses in the worst start to a year since 2010. The euro declined against all but two of its 16 major peers. The yield on 10-year German bonds fell three basis points to 1.67 per cent. Copper gained 0.3 per cent and nickel jumped 1.2 per cent.

Germany's top court asked the European Union's highest tribunal to rule on the legality of the central bank's debt-buying plan.

The selloff in developing economies probably isn't over as sentiment remains negative, Templeton Emerging Markets Group Chairman Mark Mobius said in an interview on Friday.

Three shares rose for every two that declined in the Stoxx 600, with trading volumes 19 per cent higher than the 30-day average. The index has climbed 0.4 per cent this week.

ArcelorMittal added 3.8 per cent after the world's biggest steelmaker reported fourth-quarter profit that beat analysts' projections.

Basic-resources companies gained the most among 19 industry groups in the Stoxx 600.

The Shanghai Composite Index swung to a gain of 0.6 per cent as it reopened and a private gauge showed slowing growth in the services industry. A measure of Chinese shares in Hong Kong rose 1.1 per cent.

The MSCI Emerging Markets Index climbed 0.6 per cent, trimming this year's decline to 6.7 per cent.

Shares have slumped this year as China's economy slows, weak currencies from India to Turkey spur central banks to raise interest rates and the Fed pushes ahead with plans to reduce monetary stimulus. Investors removed more than $12 billion from developing-nation equity funds in the past two weeks, the biggest outflow since January 2008, according to Morgan Stanley, citing data from EPFR Global.

Losses that dragged the MSCI gauge to a five-month low this week are likely to deepen, Templeton's Mobius said in an interview from Rio de Janeiro on Friday. He expects more selling, contrary to Jim O'Neill, creator of the Bric moniker for the four largest developing economies, who sees the rout fostering a buying opportunity.

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Source: Khaleej Times (United Arab Emirates)

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