Emerging-market shares fell after the World Bank forecast Monday that the first global recession since World War II will be deeper than it predicted in March. US wealth may take 15 years to rebound, Edmund Phelps, a professor at Columbia University and the winner of the 2006 Nobel Prize for economics, said in a Bloomberg Television interview.

“After the World Bank report Monday we see more concern about the return of negative growth dynamics,” said Michael Ganske, head of emerging-market research at Commerzbank AG in London. “Investors realize that all the discussions of a sharp, V-shaped recovery are not going to materialize.”

The yen strengthened against 13 of the 16 most-traded currencies as investors pulled out of higher-yielding assets. The Japanese currency advanced 0.4 percent against the dollar, while it slid 0.3 percent against the euro.

Credit-default swaps

The cost of insuring European corporate bonds in the credit-default swaps market climbed to the highest level since May 18, with the high-yield Markit iTraxx Crossover Index rising 20 basis points to 785, according to JPMorgan Chase & Co.

Credit-default swaps on PSA Peugeot Citroen increased 32 basis points to 383, the highest since April 1, according to CMA DataVision, as the company said it plans to sell about 500 million euros (US$697 million) of convertible bonds.

Contracts on Xstrata Plc rose 8 basis points to 355 and Anglo American Plc increased 2.5 to 242.5, CMA prices show. London-based Anglo rejected Xstrata’s proposal for a merger Monday.

Stocks and corporate bonds rallied the past three months as lower interest rates and debt purchases by central banks spurred confidence that the world economy would recover from almost $1.5 trillion of writedowns and credit losses at financial companies.

The Bloomberg Professional Global Confidence Index climbed to 43.57 in June from 38.72 in May, reaching the highest level since the survey began in November 2007. A reading below 50 means pessimists still outnumber optimists.

Source: Bloomberg