December 12, 2019 / 9:50 AM / a month ago

EMERGING MARKETS-EM assets at 1-month high; Turkish stocks up ahead of central bank meeting

* Turkey rate cut pace to slow in 2020 - analyst

* Russian stocks, rouble near one-month highs

* China stocks down as tariff deadline approaches

By Ambar Warrick

Dec 12 (Reuters) - Emerging market assets jumped to their highest in more than a month on Thursday as the prospect of an accommodative U.S. Federal Reserve pushed money into equities and undercut the dollar.

At its final meeting for 2019, the Fed held on rates and said it was likely to do so in the near term. That helped distract most markets from an impending deadline for further U.S. tariff action against China, which could potentially derail trade talks between Washington and Beijing.

The MSCI’s emerging markets stock index rose as much as 1% to a near five-week high, while the currencies index added up to 0.3%.

Turkish stocks surged ahead of a widely expected interest rate cut by the central bank, its fourth this year, according to a Reuters poll. The bank is expected to trim rates by 150 basis points to 12.5%.

The expected cut, and three others before it, have been part of an easing cycle to revive the economy from a currency crisis in 2018 that almost halved the value of the lira at one point.

Turkish inflation has also slowed substantially since the crisis and stood near three-year lows in November, reinforcing expectations for a sizeable policy rate cut at today’s meeting.

“Consumer spending is still relatively low, there is no substantial risk that demand-led pressure on inflation may increase significantly in the coming months,” said Piotr Matys, an emerging markets FX strategist with Rabobank in London.

The lira strengthened slightly to 5.7933 against the dollar, by 0944 GMT.

“Assuming that the lira stays relatively stable next year, [central bank] Governor Murat Uysal will continue cutting interest rates. The pace of easing (next year) is going to be significantly slower,” Matys added.

Russian stocks and the rouble both climbed to near one-month highs, supported chiefly by gains in oil prices as OPEC forecast a supply deficit next year.

South African stocks extended gains into a third straight session, while the rand also rose.

Chinese stocks were unnerved by the looming U.S. tariff deadline, snapping a 5-day winning streak to end lower. The yuan was little changed.

Saudi Arabian stocks dropped, reversing most of the previous session’s gains. State-owned oil behemoth Aramco however, jumped 9%, adding to gains made yesterday during its debut.

Polish stocks rose, while the zloty was marginally higher to the euro.

For GRAPHIC on emerging market FX performance 2019, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance 2019, see tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see

Reporting by Ambar Warrick in Bengaluru; editing Mike Harrison

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