Emerging debt-Grim US consumer survey leads market lower

By Daniel Bases

NEW YORK, Feb 15 (Reuters) - Emerging market sovereign bonds fell in price on Friday, following the downturn in U.S. equities after a report showed U.S. consumer sentiment is at its lowest level in 16 years.

Emerging market equities also fell in sympathy with the drop in U.S. stocks, making for a glum picture heading into the long U.S. holiday weekend. Latin American currencies trading against the U.S. dollar gave a mixed performance.

Sovereign yield spreads as measured by the benchmark JP Morgan Emerging Markets Bond Index Plus 11EMJ.JPMEMBIPLUS widened by 3 basis points to 275 basis points over stronger U.S. Treasuries.

Morgan Stanley Capital International's benchmark emerging markets stock index .MSCIEF fell 0.33 percent on the day.

"We have not fallen as much as you would think, but this morning's U.S. economic numbers were terrible. We are tracking equities and have been for a while. This isn't rocket science," said a trader at a German bank in New York granted anonymity because the person is not authorized to speak on behalf of the bank.

U.S. consumer sentiment fell sharply in early February to levels associated with previous recessions, dragged down by concerns a bleak economic outlook would raise the unemployment rate, the Reuters/University of Michigan Surveys of Consumers showed on Friday.

The index of consumer sentiment fell to 69.6, the lowest reading since February 1992 and below analysts' median forecast for a preliminary reading of 76.3. The index was at 78.4 at the end of January.

A contraction in manufacturing activity in New York in February, the first time this has occurred in almost three years, added to investor nervousness.