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US Stocks hit 10-day highs before Christmas

LONDON - Emerging equities hit 10-day highs and sovereign debt spreads narrowed in thin trading on Monday, boosted by recent upbeat US data ahead of Christmas holidays in many emerging markets.

Developed stock markets rose and the dollar was trading near a six-week high against the yen after data on Friday showed US personal spending jumped more than expected in November, suggesting consumers have not been discouraged by signs of a slowdown in the world’s largest economy.

Christmas holidays started on Monday in a number of emerging markets, including the Czech and Slovak Republics, Latvia and Lithuania.

However, Turkish markets reopened after a four-day holiday.

‘Since we’re in the last week of the year, market volume is low, which can be dangerous because small trades can have a greater influence,’ said a currency trader in Istanbul.

The MSCI benchmark emerging equities index jumped 1.55 percent to its highest since Dec. 14.

Emerging sovereign debt spreads narrowed to 229 basis points over US Treasuries from 232 bp at Friday’s close, after tightening 14 bps on Friday.

High-risk assets also found support after the Financial Times reported on its Web site that Saudi Arabia plans to establish a sovereign wealth fund that may exceed $900 billion, which would likely be the largest in the world.

The Turkish lira strengthened to 1.18459 per dollar, its best showing since Dec. 18. The Turkish currency has jumped 20 percent in 2007, as investors favour Turkey’s high interest rates.

There was little reaction to news that the Turkish military staged air and land offensives against outlawed Kurdistan Workers Party guerrillas in northern Iraq over the weekend.

Dong band

In Vietnam, the central bank widened the trading band between the dollar and the dong to plus or minus 0.75 percent from 0.5 percent previously.

‘The global weakness of the dollar, the massive dollar influx into Vietnam from foreign investors so far this year and possibly next year and now the widened band should quicken the dollar’s fall here next year,’ a banker at a foreign bank in Ho Chi Minh City said.

The dong last traded around 1,6030 per dollar.

Meanwhile, Vietnam has postponed a plan to sell $1 billion of dollar-denominated sovereign bonds until the first quarter of next year due to strong dollar liquidity at home, a Finance Ministry official said on Monday.

The issue, originally scheduled for October, has been delayed twice. Barclays, Citigroup and Deutsche Bank are advising.

Russia’s largest bank, state-controlled Sberbank plans to borrow $3 billion to $4 billion on international capital markets in 2008, the bank’s deputy chief executive told Prime-Tass news agency on Monday.

The Israeli shekel rose half a percent to a two-week high against the dollar ahead of an expected Israeli 25 basis point rate rise at 1630 GMT, to 4.25 percent.

The South African rand rallied 1 percent, trimming recent losses.

The Romanian leu rose half a percent to a near-six-week high against the euro, regaining ground lost in recent weeks after Standard & Poor’s cut Romania’s outlook to negative.

Romania plans to sell state treasuries worth 11 billion lei ($4.51 billion) in 2008, including a 15-year bond, its longest maturity to date, the finance and economy ministry said.