LONDON Aug 20 (Reuters) – Emerging equities seesawed around
flat on Monday, trading near 12-day lows due to weakness in
Chinese stocks though losses were capped by an uptick on west
European markets where investors are positioning for action from
the European Central Bank.
MSCI’s emerging equity index, which lost almost 1 percent
last week, stayed flat though its biggest component,
China, closed down 0.4 percent after hitting March 2009 lows
.
Investors are mostly staying on the sidelines though
European sentiment was bolstered by a German media report that
the ECB is contemplating action which would effectively lower
the yields on Spanish and Italian debt..
China’s central bank meanwhile has dashed investors’
expectations of a speedy cut to banks’ required reserve ratios.
The resulting tight liquidity has pushed up interest rate swaps
to three-month highs.
Offshore one-year dollar-yuan non-deliverable forwards
traded at 6.4520, the highest since mid-December
2011, implying a yuan depreciation of more than 1 percent over
the next 12 months.
Russian stocks fell 0.8 percent to two-week lows,
despite a slight recovery in oil prices to above $114 a barrel
while Polish and Hungarian stocks also lost
0.9-1 percent, tracking weakness on west European bourses.
South African stocks however rose 0.3 percent,
recovering some of Friday’s losses. But they stayed off recent
record highs as locally-listed shares in platinum miner Lonmin
fell 4 percent on continued fears of labour violence.
Tensions with Iran kept Israeli risk insurance costs
elevated, with Markit data showing 5-year credit default swaps
at the highest since mid-June.
(Reporting by Sujata Rao; editing by Stephen Nisbet)
© Thomson Reuters 2012 All rights reserved
