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[Stock Lobster]

BL: Emerging-Market Stocks Plunge on Commodity Slump; Gazprom Falls

By James Attwood

March 17 (Bloomberg) -- Emerging-market stocks fell the most in seven weeks after commodity prices plunged on concern that a U.S. recession and credit-market losses may curb profit growth.

OAO Gazprom, Russia's gas-export monopoly, and Brazil's Petroleo Brasileiro SA slid after oil prices tumbled more than $4 a barrel. Jiangxi Copper Co., China's second-largest producer of the metal, slid by the daily limit after copper prices dropped the most in seven weeks. Cia. Vale do Rio Doce, the world's biggest iron-ore producer, fell for the first time in five days.

The Morgan Stanley Capital International Emerging Markets Index fell 4.2 percent to 1,046.19 at 4:05 p.m. in New York, the steepest decline since Jan. 21. The Standard & Poor's 500 Index declined 0.9 percent.

All 35 emerging markets in the MSCI index fell after the U.S. Federal Reserve unexpectedly cut its discount interest rate and JPMorgan Chase & Co. agreed to buy Bear Stearns Cos. for about 90 percent less than its value last week. Oil, copper and agricultural commodities retreated as some investors bet the Fed won't be unable to prevent credit-market losses from spreading.

``Certainly financial stocks around the globe have gotten hammered on the Bear Stearns take-under,'' said Greg Lesko, who helps manage $1 billion at Deltec Asset Management in New York. ``You also have commodity prices off sharply. You can blame that on U.S. recession or on potential Chinese tightening after another bad inflation number over there.''

Gazprom had its biggest drop in five weeks, falling 3.5 percent to $12.40. Petrobras, Brazil's state-run oil company, tumbled 5.3 percent to 89 reais. Vale slid 6.1 percent to 55.33.

Crude oil fell 4.1 percent, to $105.68 a barrel in New York, the biggest one-day drop since April 9, 2007. Copper futures slid 3.7 percent to $3.685 a pound, the most since Jan. 23. Soybeans and corn plunged the most allowed at the Chicago Board of Trade.

Commodity prices measured by the Reuters/Jefferies CRB Commodity Price Index fell 4.6 percent.

China Stocks Fall

China's stocks tumbled the most in seven weeks on speculation the government will increase borrowing costs to counter escalating consumer prices. Jiangxi Copper was among some 60 stocks that plunged by 10 percent after the central bank governor said there's room to raise interest rates.

Indexes in India, Hong Kong and Turkey tumbled more than 5 percent. Indiabulls Financial Services Ltd., India's second- biggest bank, fell the most since September 2001, plunging 13 percent to 759.95 rupees. China Life Insurance Co., the nation's largest insurer, slid 7.4 percent to HK$25.70.

In the U.S., Bear Stearns, Lehman Brothers Holdings Inc. and Goldman Sachs Group Inc. tumbled on concern that the Fed will be unable to prevent credit-market losses from spreading. Concerns that the U.S, economy is already in a recession intensified after U.S. industrial production dropped more than forecast in February.

To contact the reporter on this story: James Attwood in Santiago at [e-mail]

Last Updated: March 17, 2008 17:00 EDT