By Michael Patterson Dec. 2 (Bloomberg) -- Emerging-market stocks rallied for a third day, led by Qatar, as concern diminished that Dubai will default. The yen weakened on speculation Japan will act to curb its gains and the dollar fell, driving gold to a record. The MSCI Emerging Markets Index rose 0.7 percent at 9:32 a.m. in New York, heading for its longest winning streak in three weeks. Qatar’s DSM 20 Index jumped 5.3 percent. The yen declined against all 16 most-traded currencies, while the dollar weakened versus 13 and gold touched $1,218.40 an ounce in New York. The Standard & Poor’s 500 Index fluctuated after an industry report showed companies cut more jobs than economists estimated, offsetting gains in metal producers. Mark Mobius, who oversees more than $30 billion as chairman of Templeton Asset Management Ltd., said in a Bloomberg Television interview in Hong Kong that Dubai will be “bailed out” by its neighbors. Prince Alwaleed bin Talal, the billionaire Saudi investor, said Middle East economies won’t be “shaken” by the crisis. Dubai’s debt rescheduling will have only a minor effect on the euro region’s economy, Luxembourg’s Jean-Claude Juncker said yesterday after leading a meeting of European finance ministers in Brussels. “We’ve got more to go” for the rally in emerging markets, said Mobius, who favors United Arab Emirates developers including Emaar Properties PJSC that tumbled more than 10 percent this week. “We’re going to see a very fast recovery, and the results of companies’ earnings are going to surprise on the upside.” China, Egypt Developing-nation stocks will climb 34 percent by the end of next year, approaching an all-time high, as low interest rates and a global economic recovery spur earnings growth, according to JPMorgan Chase & Co. MSCI’s emerging market index will rise to 1,300 by December 2010, JPMorgan’s Hong Kong-based strategist Adrian Mowat wrote in a research note today. Benchmark equity indexes in China, Egypt and Turkey climbed more than 1 percent today, while the extra yield investors demand to own emerging-market bonds over U.S. Treasuries fell for a second day. The Philippine peso and South Korea’s won strengthened more than 0.6 percent against the dollar to lead gains among developing-nation currencies. Dubai World, the state-controlled investment company, is in talks with lenders to restructure $26 billion of debt, easing concern that a default would add to the $1.7 trillion financial companies around the world have written down after the credit crisis wiped out the value of mortgage assets. CDS Prices The cost of protecting Dubai’s government debt from default was little changed today, after tumbling 30 percent since Nov. 27, according to CMA DataVision. Credit-default swaps on the nation fell 9 basis points to 451, while contracts on Saudi Arabia dropped 4 basis points to 93 and Abu Dhabi declined 2.5 to 126. The yen lost 0.5 percent against the euro and 0.5 percent versus the dollar after Japanese Prime Minister Yukio Hatoyama was cited by the Nikkei newspaper as saying the currency’s strength can’t be tolerated. Chief Cabinet Secretary Hirofumi Hirano said later Hatoyama wasn’t suggesting the government is ready to intervene. The yen has strengthened 4.1 percent versus the U.S. currency this year and traded at a 14-year high of 84.83 per dollar on Nov. 27. Japan should “call for international intervention” to stem the yen’s advance, Financial Services Minister Shizuka Kamei said in an interview in Tokyo today. Gold futures rose as much as 1.5 percent in New York, extending their ninth straight annual advance to 37 percent. Silver, platinum and palladium also gained. Among industrial metals, aluminium for delivery in three months advanced 0.9 percent to $2,121 a metric ton on the London Metal Exchange. Crude oil for January delivery fell 0.8 percent to $77.71 a barrel in New York. Developed Markets The MSCI World Index of 23 developed nations’ stocks rose 0.2 percent. Asian shares rose for a third day, lifting the MSCI Asia Pacific Index to a six-week high. BlueScope Steel Ltd., Australia’s largest steelmaker, jumped 2.8 percent in Sydney after saying demand is improving. Zijin Mining Group Co., China’s largest gold company, gained 3.4 percent in Hong Kong. Europe’s Dow Jones Stoxx 600 Index added 0.1 percent. Banks declined after Credit Suisse Group AG said U.K. lenders are “still not cheap enough” after a 9.3 percent drop for the FTSE 350 Banks Index since this year’s high in September. HSBC Holdings Plc, the region’s biggest lender, dropped 1.4 percent in London. Royal Bank of Scotland Group Plc, the U.K.’s largest state-controlled bank, tumbled 6.7 percent. More Competition Nokia Oyj slipped 0.9 percent in Helsinki. The world’s biggest maker of mobile phones expects its share of the global handset market to remain flat next year amid mounting competition from Apple Inc.’s iPhone and lower-end Chinese devices. The S&P 500 swung between gains and losses after ADP Employer Services said companies in the U.S. cut an estimated 169,000 jobs in November, the fewest since July 2008. The figures were forecast to show a decline of 150,000 jobs, according to the median estimate of 32 economists in a Bloomberg survey. The Organization for Economic Cooperation and Development forecasts that the economies of its 30 member countries will expand 1.9 percent next year and 2.5 percent in 2011 as demand from China and other emerging market countries accelerates. The group’s economies expanded 0.8 percent in the third quarter. To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.

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