By Gavin Serkin March 2 (Bloomberg) -- Developing-nation stocks rose, sending the MSCI Emerging Markets Index to its highest level in five weeks, as India’s economy improved. The pound weakened for a sixth day on concern Britain will struggle to reduce a record budget deficit. The MSCI emerging-markets gauge climbed 0.7 percent at 10:22 a.m. in London. The MSCI World Index of 23 developed nations’ stocks advanced 0.2 percent while futures on the Standard & Poor’s 500 Index were little changed. The pound extended its longest run of declines since October 2008, falling as much as 0.6 percent to $1.4902. Copper dropped 1.8 percent in London as mining in Chile, the world’s biggest producer, resumed after an earthquake. India’s government reported increases in manufacturing and exports, while Mark Mobius, who oversees $34 billion at Templeton Asset Management Ltd., said the nation’s shares may outpace emerging markets. In Britain, the pound slumped after opinion polls suggested neither of the two main political parties would win an outright majority in an election that must be held by June 10, hampering efforts to reduce the deficit. “India’s macroeconomic fundamentals have significantly improved,” Mobius said in an interview posted on the Web site of Templeton, a unit of San Mateo, California-based Franklin Resources Inc. The investment firm’s biggest holdings are in Brazil, India and China, Mobius said. India Gains The MSCI emerging markets index has gained 3.5 percent in the past three days, the biggest rally in three months. The Bombay Stock Exchange Sensitive Index jumped 2.1 percent, the most among benchmark equity indexes worldwide. Tata Motors Ltd. rose 9.7 percent, the most in six months, after India’s biggest truckmaker said February sales jumped 58 percent. South Korea’s Kospi Index climbed 1.3 percent. Emerging-market currencies weakened, led by a 0.6 percent retreat in South Africa’s rand against the dollar. The Turkish lira declined 0.3 percent. The pound weakened against 10 of its 16 most-traded counterparts, falling 0.7 percent to 132.71 yen. The U.K. Conservatives’ lead over Prime Minister Gordon Brown’s Labour Party narrowed to five percentage points in a poll published late yesterday, adding to signs Britain may have its first minority government since 1974. The election race has tightened over the past month after the economy emerged from recession and Conservative warnings of years of “austerity” to tackle the deficit frightened some voters. ‘Perilous’ Finances “The longstanding fear we’ve had is that speculators will target the U.K. at some point, given the perilous state of public finances,” Jim Reid, a strategist at Deutsche Bank AG in London, wrote in a research note. “The currency is slowly but surely taking the strain, but this and gilt yields are certainly worth keeping an eye on as we approach a pivotal election.” The 10-year gilt rose, with the yield falling 2 basis points to 4.06 percent. The yield on the September 2039 bond declined 2 basis points to 4.61 percent before the Debt Management Office sells 2 billion pounds of the securities. Europe’s Dow Jones Stoxx 600 Index fluctuated between gains and losses. PSA Peugeot Citroen, Europe’s second-biggest carmaker, led advances in auto shares, gaining 1.8 percent in Paris after saying the year started better than forecast. Luxottica Group SpA slid 4.6 percent in Milan after the maker of eyeglasses posted earnings that missed analysts’ estimates. Samsung, Nintendo The MSCI Asia Pacific Index gained 0.7 percent. South Korea’s Samsung Electronics Co., the world’s biggest maker of computer memory chips, and Japan’s Nintendo Co., which manufactures the Wii game console, gained more than 3 percent. Australia’s S&P/ASX 200 Index increased 0.3 percent. The index briefly pared gains after the nation’s central bank raised its benchmark interest rate. U.S. futures fluctuated after the S&P 500 yesterday gained 1 percent, erasing its 2010 loss. More than 460 companies in the benchmark gauge for U.S. equities have reported quarterly earnings since Jan. 11 and about 75 percent have beaten analysts’ estimates, according to Bloomberg data. Copper for delivery in three months fell $135 to $7,265 a metric ton on the London Metal Exchange, after gaining as much as 5.6 percent yesterday. Aluminum, nickel and zinc also retreated. Crude oil fell 0.4 percent to $78.41 a barrel in New York trading. To contact the reporters for this story: Gavin Serkin at gserkin@bloomberg.net

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