Emerging stocks decline as koruna tumbles

Emerging-market stocks dropped to the lowest level in a month as OTP Bank dragged down Hungarian shares. The Czech koruna tumbled the most on record as the central bank approved the first currency sales in 11 years, Bloomberg News reported.

The MSCI Emerging Markets Index slipped 0.7 per cent to 1,009.18 at 2:13 p.m. in New York, falling for a sixth day. The Budapest Stock Exchange Index retreated 1.7 per cent as OTP, Hungary’s largest lender, plunged after the central bank urged the introduction of bankruptcy rules to protect household borrowers.

The koruna posted the worst performance among 31 emerging-market currencies tracked by Bloomberg. Brazil’s Ibovespa dropped to the lowest level in a month as Vale SA sank.

Stocks joined a global slump in equities after a report showing faster economic growth in the US spurred concern the Federal Reserve will scale back stimulus sooner than expected. European Central Bank President Mario Draghi warned the euro area risks a “prolonged period” of low inflation as the bank cut its benchmark interest rate to a record.

“We’ve had a push out of tapering which gave EM stocks some breathing room, but we’re still concerned about growth headwinds for 2014,” Michelle Gibley, director of international research at San Francisco-based Charles Schwab Corporation, said by phone. The firm manages $2.15tn in client assets.

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