(Bloomberg) -- Emerging-market stocks declined to a three-week low after better-than-estimated U.S. data bolstered speculation the Federal Reserve will reduce stimulus. South Africa’s rand slumped to the lowest level since 2009.

Equities pared losses amid optimism U.S. lawmakers will reach a compromise on the federal budget. The MSCI Emerging Markets Index fell 0.6 percent to 996.60 at 11:11 a.m. in New York. The Czech PX Index sank as data showed the economy contracted for a seventh quarter. The Shanghai Composite Index jumped on central bank plans to implement reform measures for the free-trade zone within three months. The rand retreated amid the longest slide of South African bonds in five years.

Consumer, industrial and financial companies led declines among the 10 groups in the gauge for developing-nation stocks. Data today showed that U.S. employers added more workers than forecast in November, while purchases of new homes surged in October by the most in three decades. The gauge for stocks in developing nations has slid as much as 16 percent since May 22, when the U.S. central bank signaled its asset-buying program could be trimmed if the economy showed sustained improvement.

“When we get better-than-expected U.S. economic data, that renews tapering fears,” Alec Young, a global equity strategist at S&P Capital IQ, said by phone from New York today. “Emerging markets are very sensitive to that.”

Stocks trimmed losses amid speculation U.S. budget negotiators are near a deal to ease automatic spending cuts that congressional aides say could boost user fees rather than end corporate tax breaks. Negotiators are “down to the last few items,” said Representative Tom Cole of Oklahoma, a member of a 29-member committee aiming to reach an agreement by Dec. 13 that sets federal spending levels for this year and next.

Emerging ETF

The iShares MSCI Emerging Markets Index exchange-traded fund rose less than 0.1 percent to $41.33. The Chicago Board Options Exchange Emerging Markets ETF Volatility Index, a measure of options prices on the fund and expectations of price swings, climbed 1.6 percent to 26.53.

Brazil’s Ibovespa rebounded from a three-month low as phone company Oi SA rallied 6.2 percent. Shorter-term swap rates declined on speculation policy makers will signal a slowdown in the pace of borrowing cost increases in minutes of their November policy meeting due tomorrow.

The PX index slumped in Prague as developer Orco Property Group SA tumbled to the lowest level since October 2012. Russia’s Micex Index dropped to a three-month low, led by OAO Gazprom. Poland’s WIG20 Index declined for a third day, while benchmark gauges in Hungary and Turkey advanced.

India, China

India’s S&P BSE Sensex retreated for a second day amid speculation a rally in crude will stoke inflation in a country that buys about 80 percent of its oil from abroad. ITC Ltd. slid 2 percent, sending a gauge of consumer goods companies to a two- week low. India’s rupee reversed earlier losses on speculation inflows will continue as monthlong local elections for five regions end today.

Chinese stocks rose to the highest level since Sept. 12 as Shanghai Waigaoqiao Free Trade Zone Development Co. jumped by the daily limit of 10 percent, while Shanghai-based China Eastern Airlines Co. climbed 5.9 percent. Cosco Shipping Co. surged 10 percent on speculation the government will provide more support to the industry.

South Africa’s rand dropped on concern that the nation will struggle to finance its current-account gap when Federal Reserve stimulus dries up. Foreign investors dumped South African bonds for a 10th straight day yesterday, the longest streak since October 2008, according to data compiled by Bloomberg from the Johannesburg Stock Exchange.

The premium investors demand to own emerging-market debt over U.S. Treasuries fell five basis points, or 0.05 percentage point, to 335 basis points, according to JPMorgan Chase & Co.

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