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Oct. 13 (Bloomberg) -- Emerging market stocks and bonds rose after their worst week in at least a decade as world leaders pledged unprecedented support to help financial institutions weather the banking crisis.
The MSCI Emerging Markets Indexheaded for its biggest jump in almost a month with a 4 percent gain to 615.36, after losing a record 20 percent last week. The extra yield investors demand to own developing nations' bonds instead of U.S. Treasuries fell 4 basis points to 6.49 percentage points, retreating from the highest spread since April 2003, according to JPMorgan Chase & Co.'s EMBI+ index.
The U.S. Federal Reserve, European Central Bank and the Bank of England will offer financial institutions unlimited dollar funds for the first time in an attempt to break the squeeze in money markets. European leaders agreed this weekend to guarantee new bank refinancing, and use government money to prevent lenders collapsing. Germany is preparing its own rescue plan that may total as much as 400 billion euros ($540 billion).
``We can only hope that this pill is more effective and its positive impact lasts longer versus some of the other pills given to the patient,'' saidMikhail Galkin, head of fixed- income research at MDM Bank in Moscow. ``What is key is quick execution of liquidity injections into banks.''
Russia's Micex Index rose 4.4 percent after a trading suspension on Friday. Gains in Russia government bonds reduced the yield on 30-year dollar notes by 57 basis points to 9.52 percent, retreating from a six-year high, Bloomberg prices show.
China's CSI 300 Index advanced 4.1 percent, the first gain for the country's stock benchmark in six days. South Korea's Kospi Index rose 3.8 percent, its biggest increase since Sept. 19. India's Sensex Index jumped 7.4 percent, its biggest one-day surge in more than four years.
To contact the reporter on this story: Denis Maternovsky in Moscow atdmaternovsky@bloomberg.net
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