http://www.bloomberg.com/apps/news?pid=20601110&sid=a48b6BKF6kcI
Emerging-Market Stocks Fall on Dubai, Greece, Spain Concern
By Michael Patterson
Dec. 9 (Bloomberg) -- Emerging-market stocks fell for a fourth day, their
longest losing streak in more than two months, as Dubai struggled to
restructure debt, Greece’s bonds faced a further downgrade and Standard &
Poor’s lowered its outlook on Spain to negative. Oil rose, while U.S. shares
retreated.
The MSCI Emerging Markets Index declined 1 percent at 9:50 a.m. in New York as
Dubai’s equity gauge slid 6.4 percent. Greece’s Athens Stock Exchange General
Index sank 4.7 percent. European shares and the Standard & Poor’s 500 Index
dropped.
Greek Finance Minister George Papaconstantinou said there is “absolutely” no
chance of a default as the country’s bonds slumped the most in a decade, while
the cost of credit-default swaps on Dubai’s state-controlled DP World implied a
33 percent risk that the port company will renege on debt. S&P said Spain will
experience a “more pronounced and persistent deterioration in its public
finances and a more prolonged period of economic weakness versus its peers,”
than it had expected in January.
“A financial crisis is like a disease, it spreads,” Philip Gisdakis, the head
of credit strategy at UniCredit SpA in Munich, wrote in a research note today.
“Although Greece is small enough of a problem that it must be bailed out, the
risk is that it will not only be Greece that will need support.”
Greek Bonds
Greek 10-year government bonds slid for a fifth day, their longest-losing
streaking since May, driving the yield up 22 basis points to 5.67 percent.
Chris Pryce, director of sovereign and international public finance at Fitch
Ratings in London, said today in a Bloomberg Television interview he’s not
convinced the nation will avoid a debt default as its budget deficit rises.
The Dubai Financial Market General Index plunged for a third day, wiping out
its 2009 advance, as state-controlled Dubai World planned asset sales and
Moody’s Investors Service downgraded six Dubai borrowers. The ADX General Index
in Abu Dhabi, the wealthiest of the seven sheikdoms that comprise the United
Arab Emirates, lost 2.8 percent.
Greece’s ASE Index fell for a third day. National Bank of Greece SA, the
nation’s biggest, slid 7.4 percent in Athens. EFG Eurobank Ergasias SA, the
second-largest, tumbled 9.5 percent.
Europe’s Dow Jones Stoxx 600 Index lost 1.1 percent as banks and insurers
retreated.
Japan Stocks
Japanese stocks fell the most in eight days after a government report showed
the economy grew at an annual 1.3 percent pace in the third quarter, slower
than the 4.8 percent in preliminary figures last month. The Nikkei 225 Stock
Average fell 1.3 percent as the MSCI Asia Pacific Index declined 0.8 percent.
Mitsubishi UFJ Financial Group Inc., Japan’s largest bank by market value,
tumbled 5.2 percent in Tokyo. Mitsubishi Heavy Industries Ltd., the country’s
biggest maker of heavy machinery, sank 2.5 percent. The yen strengthened 0.3
percent versus the dollar as investors sought the Japanese currency as a refuge.
The loss in U.S. stocks signaled the S&P 500 may extend a two-day drop. PepsiCo
Inc. fell the most in the index, losing 3.7 percent after Calyon Securities
began coverage with an “underperform” rating.
The benchmark gauge for U.S. equities tumbled 1 percent yesterday, paring its
rally since March 9 to 61 percent. The measure is valued at about 22 times its
companies’ reported operating earnings, near the highest since 2002, according
to data compiled by Bloomberg.
Geithner Plan
Treasury Secretary Timothy Geithner told Congress that the Obama administration
will extend the $700 billion financial- rescue program until next October.
U.K. government bonds erased declines after Chancellor of the Exchequer
Alistair Darling said gilt sales will rise by 5.1 billion pounds ($8.3 billion)
in the year through March 2010. The yield on the 10-year gilt fell 4 basis
points to 3.65 percent, after earlier adding as much as 6 basis points.
The cost of hedging against losses on Dubai sovereign debt surged 47.5 basis
points to 592, according to CMA DataVision prices for credit-default swaps.
Contracts on Greece jumped 12 to 221, the highest level since March, and swaps
on the U.K. climbed 1 to 78, to their most expensive price since July.
Deutsche Bank AG, the bond trustee of Dubai World’s property unit Nakheel PJSC,
is seeking clarity from the issuer about its plans to restructure debt,
according to two investors who participated in a conference call with the bank
today. The call finished without any discussion of adopting specific
recommendations, said the investors, who declined to be identified because the
discussion was private.
Gold for immediate delivery slipped $6.97 to $1,136.73 an ounce in London.
Crude oil climbed, snapping a five-day decline, after an industry report showed
a fall in U.S. crude inventories. The American Petroleum Institute said crude
inventories fell by 5.82 million barrels last week. Crude oil for January
delivery rose as high as $73.87 in electronic trading on the New York
Mercantile Exchange.
The U.S. Energy Department will release its weekly report on inventories later
today in Washington.
To contact the reporter on this story: Michael Patterson in London at
mpatterso...@bloomberg.net.
Last Updated: December 9, 2009 09:55 EST
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