LONDON, July 25 (Reuters) – Emerging market stocks hit
7-week lows on Wednesday, weighed down by weakness in Chinese
equities though emerging European markets tracked their
developed peers higher and most emerging currencies firmed
modestly against the dollar and euro.
The euro zone crisis appeared no closer to resolution, as
Spain paid the second highest yield on short-term debt since the
birth of the euro at this week’s auction and EU officials said
Greece had little hope of meeting bailout terms.
But markets were cheered by European Central Bank Governing
Council member Ewald Nowotny who said there were reasons to
boost the firepower of the euro zone’s new bailout fund to
tackle the region’s deepening debt crisis..
Benchmark emerging stocks fell almost 1 percent
before recovering to an overall fall of 0.3 percent on the day.
The market was weighed down by China which constitutes
almost a fifth of the index. Chinese stocks fell by 0.49
percent, hovering just above the year’s lows first touched
during Tuesday’s trading.
Sentiment was dented by falls in property stocks and a
report from the International Monetary Fund that China’s
currency was still “moderately undervalued” and that its slowing
economy is exposed to the ongoing euro zone crisis.
“China’s slowing economy faces significant downside risks
with the European crisis as the biggest external influence”, SEB
told clients in a note.
The Chinese yuan touched a 10-month low against
the dollar after the central bank set its weakest fixing for the
local unit in eight months, an indication the bank is keen to
boost growth and exports.
Emerging European equities rose however, led by Russia which
jumped 1 percent, while Polish and Hungarian equities
rallied 0.5 percent and Turkey firmed 0.4
percent
Continued…
