Emerging market stocks rose

Emerging market stocks rose, with the benchmark index rising more Chinese in eight weeks, after the central bank refrained from raising interest rates and reports said economic growth is accelerating.

The MSCI Emerging Markets Index rose 0.4 percent to 1,119.02 by 10:28 am in London, ready for the biggest gain in a week. The Shanghai Composite Index rose 2.9 percent, the most since Oct. 15. the Turkish bond yields fell to a record after central bank deputy governor said lower interest rates may be needed to reduce the current account deficit.

China on December 10 ordered banks to set the largest reserves on one side and did not announce an increase in interest rates and the inflation rate reached 5.1 percent in November while industrial growth production exceeded economists' estimates. The government is likely to set a target of at least 7 billion yuan (1.1 billion) of new loans for 2011, said two people briefed on the matter. Economists at UBS AG and Bank of America Corp. had forecast a market share of 6.5 billion yuan to 7 billion yuan.

The decision not to raise rates is very positive news, "said Zhen, who helps manage 301 million U.S. dollars in Shanghai Huili Asset Management. "The central bank will be very cautious about interest rates."

The MSCI emerging market index recovered from a fall of 0.6 percent last week and has gained 13 percent so far this year. Size 21 countries is still down 3.2 percent from their peak in 2010 on 5 November.

Russian Rally

Russia's RTS index rose 1.1 percent to the highest level on a closing basis since August 2008, as energy companies OAO Gazprom and OAO Rosneft rose on increased oil prices. South Korea's Kospi index rose 0.5 percent to the highest since November 2007 after Hyundai Motor Co. won an announcement that U.S. vehicle sales exceeded 500,000 this year.

Emerging market currencies were mixed. South African rand increased the most, rising 0.3 percent against the dollar. The Philippine peso weakened 0.5 percent to lead decreases.

The extra yield investors demand to own emerging-market debt over U.S. Treasuries fell five basis points to 2.25 percentage points, the lowest level since December 2007, according to JPMorgan Chase & Co. 's EMBI + index.

The 2010 Shanghai Composite Index cut its losses to 11 percent. The indicator is the index lower baseline performance among major emerging markets this year after the government raised borrowing costs in October and took steps to restrict real estate speculation.

Industrial Production

Data published on 11 December showed that the economy is resisting government curbs. The industrial-production growth accelerated to 13.3 percent last month from a year earlier, beating the average estimate of 13 percent in a survey. Urban fixed asset investment also grew at a faster pace, rising 24.9 percent in the first 11 months of 2010. Retail sales gained 18.7 percent in November, matching the median estimate.

Jiangxi Copper Co., China's largest producer of the metal, rose 10 percent in Shanghai. Copper for delivery in three months rose to 1.8 percent to a record in the London Metal Exchange.

Gazprom, the Russian monopoly over natural gas exports, rose 1.3 percent and state oil producer Rosneft increased 0.8 percent. Oil rose 0.9 percent in the New York Stock Exchange after OPEC unchanged production goals in a weekend meeting.

Turkey's two-year bond yield fell reference to 23 basis points to 7.46 percent in Istanbul. The ISE National 100 Index of stocks rose 1.5 percent.

Erdem Basci, the central bank's deputy chief of Turkey, Durmus Yilmaz can succeed as head of the lender next year, said a combination of interest rate cuts to limit the profits of the lira and higher reserve ratios to curb credit growth is the ideal policy mix to address a growing current account gap. He made the proposal in an article published this weekend in the central bank's website.