LONDON, July 23 (Reuters) – Emerging stocks fell 2 percent
on Monday as renewed worries about Spain’s finances hit appetite
for riskier assets and shares in Shanghai fell after a central
bank adviser said growth in the world’s No. 2 economy could slow
further.
In emerging Europe, Russian stocks were hardest hit, losing
3.6 percent, also their biggest one-day loss in two
months, as the price of oil, Russia’s chief export, fell more
than $3 a barrel.
The Russian rouble and the South African rand were also hit
by worries about the euro zone, falling more than 1 percent
against the dollar as concerns about Spain made investors
globally more risk averse.
Ten-year Spanish government bond yields soared to fresh
euro-era highs of 7.55 percent after two regions sought
sovereign aid and reignited fears the country will become the
next euro zone member to seek a full international bailout.
“For some time, markets have been shrugging off the
deterioration in Spanish fixed income but there is a realisation
that it poses a clear danger,” said Manik Narain, emerging
markets strategist at UBS.
“Realisation is seeping in that Europe poses a potent
threat and the underlying global economy is not strong enough to
weather it.”
Emerging equities hit 10-day lows, heading for
their biggest one-day fall since end-May.
There were also heavy falls in Asia. Shares in Shanghai
hit their lowest close since March 2009 as comments by
an adviser to the People’s Bank of China over the weekend,
saying that third-quarter growth could slow to 7.4 percent, from
7.6 percent in the second quarter, weighed.
Many fear that data due on Tuesday will show continued
weakness in the Chinese and European economies.
Continued…
