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EMERGING MARKETS-EM stocks rise after split Fed cools rate fears

LONDON, Aug 18 (Reuters) - Emerging market equities rose on Thursday after U.S. Federal Reserve minutes suggested a rate hike was unlikely in September, nearing one-year highs reached earlier this week, while EM currencies benefited from a weaker dollar.

The benchmark emerging stocks index was up 0.8 percent, recovering from a 0.6 percent dip on Wednesday after hawkish comments from Fed officials William Dudley and Dennis Lockhart.

But investors were cheered by the minutes released late on Wednesday which showed policymakers were still divided over whether to raise rates.

“Dudley’s comments earlier this week caught markets by surprise, so when the FOMC minutes came out it was a bit of a relief - I think he made those comments to check market sentiment and make sure they weren’t running ahead too far,” said Per Hammarlund, chief emerging markets strategist at SEB.

He added that the momentum in the market had regained strength in recent weeks as more investors had become convinced that the EM rally was sustainable.

Asian markets set the tone, with Hong Kong shares up around 1 percent, Indonesia up 1.5 percent and Korea up 0.6 percent. These strong performers put Asian stocks on track for their biggest single-day rise in nearly two weeks, despite a small fall in Chinese mainland shares.

The upbeat mood extended into most European markets with Russian dollar-denominated stocks up 1.2 percent, Turkish stocks up 0.8 percent and Prague shares up 0.3 percent. South African stocks rose 0.6 percent.

Emerging market currencies were helped by dollar weakness , which gave up 0.24 percent against a basket of currencies.

High yielders such as the South African rand firmed 0.8 percent, whilst the Russian rouble strengthened 0.4 percent to a four-week high, supported by a gain in oil prices back towards $50 a barrel. The Kazakh tenge firmed 0.6 percent.

Ukraine’s hryvnia remained under pressure as tensions with Russia simmered, weakening 0.3 percent against the dollar.

The Polish zloty was steady against the euro ahead of a raft of data, whilst the Hungarian forint firmed 0.2 percent.

Zambia’s benchmark 2027 eurobond remains firm near the 12-month highs it hit on Tuesday following the re-election of President Edgar Lungu. However, the main opposition party is challenging the win, alleging vote-rigging.

For GRAPHIC on emerging market FX performance 2016, see link.reuters.com/jus35t

For GRAPHIC on MSCI emerging index performance 2016, see link.reuters.com/weh36s

For GRAPHIC on MSCI emerging Europe performance 2016, see link.reuters.com/jun28s

For GRAPHIC on MSCI frontier index performance 2016, see link.reuters.com/zyh97s

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see )

Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg

on year

Morgan Stanley Emrg Mkt Indx 916.85 +7.18 +0.79 +15.45

Czech Rep 852.46 +1.66 +0.20 -10.86

Poland 1815.17 -9.23 -0.51 -2.37

Hungary 27730.33 -60.64 -0.22 +15.93

Romania 6893.70 +27.51 +0.40 -1.58

Greece 570.39 +2.90 +0.51 -9.66

Russia 978.07 +12.68 +1.31 +29.20

South Africa 45653.85 +267.07 +0.59 -0.31

Turkey 78644.46 +496.64 +0.64 +9.64

China 3104.32 -5.23 -0.17 -12.29

India 28170.85 +165.48 +0.59 +7.86

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2016

Czech Rep 27.00 27.01 +0.04 -0.01

Poland 4.28 4.29 +0.05 -0.61

Hungary 310.11 310.73 +0.20 +1.46

Romania 4.47 4.47 +0.09 +1.11

Serbia 123.21 123.13 -0.06 -1.41

Russia 63.65 63.87 +0.33 +14.61

Kazakhstan 339.42 341.56 +0.63 +0.32

Ukraine 25.11 25.08 -0.12 -4.61

South Africa 13.27 13.37 +0.77 +16.53

Kenya 101.30 101.40 +0.10 +0.89

Israel 3.78 3.79 +0.12 +2.82

Turkey 2.92 2.92 +0.01 -0.15

China 6.63 6.63 -0.00 -2.12

India 66.77 66.88 +0.17 -0.86

Brazil 3.20 3.20 -0.05 +23.55

Mexico 18.03 18.13 +0.53 -4.78

Debt Index Strip Spd Chg %Rtn Index

Sov’gn Debt EMBIG 360 0 .06 7 69.27 1

Editing by Raissa Kasolowsky

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