LONDON Dec 18 (Reuters) - Emerging stocks edged towards eight-month highs on Tuesday, supported by gains in China and hopes of a U.S. budget compromise, and Turkish stocks hit record highs ahead of expected rate cuts.
Chinese stocks, the largest component of the MSCI emerging stocks index, hit five-month highs led by gains in the financial sector.
Shanghai stocks are down 1.5 percent on the year, however.
MSCI's emerging equity index gained 0.25 percent on the day, with global sentiment helped by a narrowing of differences over how to resolve the U.S. fiscal standoff. . The index has risen 14 percent this year.
"I am bullish on emerging markets in the near term if we do manage to clear out the global risks, especially in the United States," said Benoit Anne, head of emerging markets research at Societe Generale.
Turkish stocks hit record highs ahead of expected cuts of at least 25 basis points in key Turkish rates on Tuesday.
Czech stocks hit 10-month highs and Polish stocks hit their highest since August 2011, while Russian stocks hit two-month highs.
The Hungarian forint hit five-month lows ahead of an expected 25 basis point rate cut, after diving on Monday on rumours, denied by the central bank, of a change to a key policy tool.
The Romanian leu steadied near four-month highs set in the previous session after President Traian Basescu re-appointed leftist Victor Ponta as prime minister, giving his arch rival a mandate to complete a new deal with the IMF.
The rand rose to its highest in 2-1/2 months, before trimming gains, on relief at a lack of surprises from an African National Congress internal leadership election.