Emerging Stocks Head for Two-Month High on Greek Deal Hopes

Emerging-market stocks gained, heading for a two-month high, on speculation Greece is nearing a deal to write down debt.

The MSCI Emerging Markets Index climbed 0.2 percent to 974.30 as of 12:25 p.m. London time, set for its highest since Nov. 14. The Shanghai Composite index lost 1.4 percent after rallying the most since October 2009 yesterday.

Indonesia’s Jakarta Composite Index rose 0.6 percent after Moody’s Investors Service upgraded the nation’s sovereign debt rating to investment grade. Benchmark indexes in Hungary and Poland gained at least 0.9 percent.

Greek Prime Minister Lucas Papademos resumes talks with private bondholders today about a deal to write down some of the country’s debt.

The International Monetary Fund is proposing to raise its lending capacity by $500 billion to insulate the global economy against any worsening of Europe’s debt crisis, according to a person familiar with the discussions.

“We are suspicious of the current unabated rally in risk appetites since the start of the week, fed off better data and some hope of progress in Greece,” analysts at BNP Paribas SA including Bartosz Pawlowski in London wrote in an e-mailed note to clients. “We saw some profit taking in Asian stocks today, with the general mood heading into Chinese New Year one of lingering caution.”

From: Bloomberg Business Week