Stocks fall back amid euro jitters and unrest in Russia

London: Emerging stocks fell from a five-month high yesterday, as uncertainty over a bailout for debt-stricken Greece dented appetite for most risky assets, while political unrest in Russia and Romania triggered a rise in debt insurance costs.

The MSCI emerging equities index fell 0.5 per cent, ending a four-day winning streak, as an extension to Greece's debt talks fanned fears of a messy default.

Emerging stocks rose over 3 per cent last week to post gains of over 14 per cent rise since the start of 2012 as upbeat factory data and signs of strong recovery in the US jobs market boosted optimism over the outlook for global growth.

"There's two cross currents in the markets. On the one hand there is continued uncertainty around developments in Europe over whether Greece will be able to secure a new funding deal... On the other hand we have more positive forces such as the good news on most leading indicators," said Manik Narain, emerging markets strategist at UBS.

"These two forces are doing battle with each other and the extension of the deadline for Greece has prompted investors to take some profits off what has been a very strong six weeks in emerging markets."

Hungarian stocks inched up 0.2 per cent, having touched a six-month high earlier in the session, while Polish shares were little changed, hovering near three-month highs, and Turkish stocks edged down 0.2 per cent, remaining close to 4-1/2-month peaks.

In the Middle East, Saudi shares eased from 12-month peaks, while the Egyptian bourse was dragged down by Egypt's biggest investment bank, EFG-Hermes. Shares in EFG plunged 5.7 per cent after its chief executive was banned from leaving the country.

Egyptian stocks jumped 28 per cent in January after shedding 50 per cent in 2011 amid political turmoil.

Emerging sovereign debt spreads widened one basis point to 345 bps over US Treasuries, trading around the lowest since mid-Nov-ember.

Political unrest drove up the price of central and east European debt, with the cost of insuring Russia's debt against default rising 8 basis points to 223 in the five-year credit default swap (CDS) market according to Markit. Romanian CDS rose 9 basis points to 380 bps.

Romania's Prime Minister Emil Boc resigned following weeks of nationwide protests against austerity measures, but the move had limited impact on the leu that edged some 0.1 per cent lower against the euro. The International Monetary Fund said the political upheaval should have no effect on its aid deal with Romania.

The Bucharest stock market fell over 2 per cent at one point before clawing back some losses.

Russia's rouble was little changed against a basket of currencies and stocks were flat, despite mass demonstrations on Saturday by both opponents and supporters of Prime Minister Vladimir Putin, a month before March 4 presidential elections.