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    Emerging-Market Stocks Fall a Fourth Day on Metals; China Sinks

    By Zijing Wu and Fabio Alves

    Sept. 28 (Bloomberg) -- Developing-nation stocks declined for a fourth day, the longest stretch of losses since June, as metals prices fell and concern deepened that the global recovery isn’t robust enough to justify this year’s rally.

    The MSCI Emerging Markets Index dropped 0.4 percent to 904.54 at 5:09 p.m. in New York, the lowest level since Sept. 15. It’s the longest stretch of losses since June 18. Chinese banks and metal producers fell, sending the Shanghai Composite Index down 2.7 percent to a four-week low as investors sought to cut risk before a weeklong holiday that begins Oct. 1.

    The MSCI gauge for 22 developing nations has retreated 1.9 percent since Sept. 22 on speculation shares trading at their most expensive level since 2000 outpaced demand prospects for commodities that sustain emerging economies. Copper slumped to the lowest price in more than five weeks today as stockpiles swelled to the highest since May.

    We are heading toward some form of correction in October,” said Arjuna Mahendran, the Singapore-based chief investment strategist for Asia at HSBC Private Bank, in an interview with Bloomberg Television.

    A correction is commonly defined as a decline of 10 percent to 20 percent from a recent peak.

    The MSCI index traded at an average of 20.7 times reported earnings on Sept. 22, the highest level since June 2000.

    China, Dubai

    Industrial & Commercial Bank of China Ltd., the nation’s largest lender, declined the most in six weeks and China Life Insurance Co., the largest insurer, dropped 3.3 percent in Shanghai trading.

    Jiangxi Copper Co., China’s biggest producer of the metal, and Zhongjin Gold Co. lost more than 5 percent. The country’s markets will be shut from Oct. 1 to Oct. 8 for the National Day and mid-fall holidays.

    Dubai shares dropped the most in six weeks after the gap between loans and deposits at banks in the United Arab Emirates widened and Jones Lang LaSalle said Dubai’s house prices will fall further. The DFM General Index retreated 2.6 percent.

    Latvia’s OMX Riga index slumped 7.5 percent, the most among all 91 indexes tracked by Bloomberg on speculation this quarter’s 37 percent rally, its biggest since at least 2000, outpaced prospects for a recovery in the Baltic economies. Lithuania’s OMX Vilnius index sank 4 percent, the second- steepest decline worldwide. The Vilnius index has surged 67 percent so far this quarter.

    MSCI’s emerging-markets index pared a loss of as much as 1.2 percent after Latin American stocks rallied. Brazil’s Bovespa index gained 1.6 percent as analysts boosted their growth forecasts for the country’s economy next year.

    Emerging-market bonds declined, sending the extra yield investors demand to own developing nations’ bonds instead of U.S. Treasuries up two basis point to 3.41 percentage points, according to JPMorgan Chase & Co.’s EMBI+ Index. Borrowing costs climbed three basis points on Turkish and Ukrainian debt.

    To contact the reporters on this story: Zijing Wu in London [email protected]; Fabio Alves in New York at

    [email protected]

    Last Updated: September 28, 2009 17:29 EDT
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