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Wednesday, 27 June 2012

2012.06.26 22:25:06 SBA Communications to Buy Cell Towers For $1.45 Billion

 

--Emerging-market currencies mixed; Mexico peso leads gainers

--Emerging-market debt slightly stronger

--Investor focus on coming EU summit

       By Erin McCarthy and Joshua Dawsey    

Emerging-market debt strengthened a tad while currencies traded their separate ways Tuesday as investors geared up for a critical two-day summit of European leaders later this week.

European Union heads of state will be meeting starting on Thursday, leaving many investors on hold or squaring up their positions two days ahead of the pivotal summit. While markets are looking for more clarity on unified European banking oversight and further measures to protect the currency union from further contagion, but analysts warn that expectations are low. In addition, on Tuesday, ratings agency Egan-Jones downgraded Germany's rating, reminding markets that Europe's biggest economic engine is highly exposed to troubled euro-zone countries.

"Disappointment is driving sentiment today," said Jose Wynne, research director at Barclays. "You don't see a lot of activity, as everyone is just waiting to hear from the Europeans on what they have in mind."

Emerging-market sovereign debt was largely steady, as its risk premium tightened three basis points to 387 basis points over Treasurys, according to the J.P. Morgan Emerging Markets Bond Index Global, or Embig. In price terms, its index was flat.

Argentina's debt, which often outpaces broader market moves, significantly outperformed the asset class. Its spread shed 41 basis points to 1087 basis points over Treasurys. On Tuesday, Argentina's federal government said Tuesday it will borrow $2.18 billion from the central bank's international reserves to pay creditors.

Among currencies, the Mexican peso was a top gainer, likely taking cues from gains in U.S. equities and after positive economic data. Mexico's economic activity rose 4.7% in April on the year, beating expectations.

"For this environment, that is very good," Mr. Wynne said. In addition, markets are increasingly certain Enrique Pena Nieto, the frontrunner in this weekend's elections, will become the next president, he said. The peso advanced 1.3% against the dollar, which traded at MXN13.7362, according to CQG.

Elsewhere in the region, the Brazilian real failed to eke out gains, sliding 0.5% against the dollar, which traded at BRL2.0725.

In Europe, the Turkish lira was a top gainer, advancing 0.8% against the U.S. currency, which bought TRY1.8077, according to CQG. The lira has benefited from lower oil prices in recent days, as Turkey is a net oil importer.

Hungary's currency advanced as well, after Hungary's central bank kept its key policy rate on hold Tuesday at 7%. The euro traded at HUF285.88 from HUF287.77 late Monday, according to CQG.

Write to Erin McCarthy at erin.mccarthy@dowjones.com

 

(END) Dow Jones Newswires

June 26, 2012 16:26 ET (20:26 GMT)

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