Emerging market stocks advance to 5-week high on commodity price rally

Written by Bloomberg | Updated: Oct 26 2011, 09:28am hrs
Emerging market stocks rose, with the benchmark index climbing to a five-week high as rising metal and oil prices boosted commodities producers and investors awaited the results of an EU summit on Wednesday.

The MSCI Emerging Markets Index gained for a third day, adding 1.1% to 959.64 in London, set for the highest level since September 16. The Hang Seng China Enterprises Index of Chinese shares traded in Hong Kong advanced 1.5%. Thailands SET Index climbed 2.9% after the countrys holiday on Tuesday European leaders will hold a second summit in four days on Thursday to contain the regions debt crisis. Stocks in emerging Europe moved between gains and losses as fiscal austerity in the euro area threatened to slow growth, hurting demand for Polish, Czech and Hungarian exports.

Markets look disoriented at present, since euro-region sovereign debt negotiations will also have major influence on the 2012 economic outlook for central and eastern Europe, Daniel Lenz, a Frankfurt-based analyst for emerging markets at DZ Bank AG, wrote in an e-mail to clients.

The MSCI emerging-market gauge has fallen 17% this year, compared with a 5.2%drop in the MSCI World Index, as faster inflation in China, India and Brazil prompted policy makers to raise interest rates, curbing economic growth. Shares on the developing nations gauge trade at 10.6 times earnings, compared with a four-year average of 14.2 times, according to data.