Emerging market rout eases as data lifts growth hopes

Fri Aug 23, 2013 8:30am EDT
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By Marc Jones

LONDON (Reuters) - The rout in emerging markets eased on Friday and world shares headed for a second day of gains, as data suggesting the global economy is improving took the edge off concerns about a cut in U.S. monetary stimulus.

Wall Street was expected to open little changed with the focus largely on housing data due at 10 a.m. ET after gains in the previous session gave the S&P 500 .SPX a chance to secure its first weekly rise in three weeks.

Ahead of the U.S. restart, Europe's main stock markets were broadly steady but attention remained firmly on Asia after a torrid week that has wiped billions of dollars off emerging markets for the second time in two months. <EMRG/FRX>

MSCI's emerging share index .MSCIEF was on track for its first gains after six sessions in the red and the selling of India's rupee subsided after the currency's worst week against the dollar in decades.

"Hopefully the worst (of the emerging market selling) may now be over," said Hans Peterson global head of asset allocation at SEB investment management, adding his firm may soon start "bottom fishing" in Asia.

"It doesn't seem to be a repeat of the 1997 (Asian crisis) situation ... and it seems like people are not so keen on being extremely short anymore so it might twist around a bit."

The relief rally was supported by a dip in U.S. bond yields, which edged back from the previous session's two-year high to 2.89 percent in European trading, while the dollar .DXY steadied after hitting a three-week high. <FRX/>

Actions from under-pressure authorities also helped.   Continued...

A man walks through the lobby of the London Stock Exchange August 5, 2011. REUTERS/Suzanne Plunkett