EMERGING MARKETS-Emerging shares hit high on trade truce; big jump in yuan

* Shanghai shares see biggest daily gain in a month

* Turkish lira and Indian Rupee fall on surging oil prices

Dec 3 (Reuters) - Emerging market shares hit a two-month high on Monday after U.S. and Chinese leaders agreed to a temporary trade truce while currencies gained against a weaker dollar with the trade-exposed Chinese yuan clocking its biggest gain since February, 2016.

The White House said on Saturday that U.S. President Donald Trump and Chinese President Xi Jinping had agreed to keep the trade war from escalating by pledging to halt imposition of new tariffs for 90 days, while continuing to work on a long-lasting agreement in the given period.

MSCI’s broader index for stocks rose over 2 percent on Monday with mainland China shares logging their biggest one-day gain in a month and Hong Kong shares climbing over 2.4 percent.

The implications of a full-blown trade war have weighed on equities in the developing world since the start of the year, but a boost in sentiment from expectations of the trade truce as well as dovish stance from the U.S. Federal Reserve resulted in November being the best month for emerging assets in 2018.

But analysts caution that the truce has only bought a bit more time for wrangling over deeply divisive trade and policy differences, and recent data suggests China as well as some Asian economies continue to cool regardless, as domestic demand weakens.

“This is major move but it’s more of a unwind of fear of things getting worse. Feels like they wanted to take a moratorium over the holiday period to ensure investors are not stuck with a lump of coal under their Xmas tree,” said Stephen Innes, head of trading, Asia Pacific at OANDA.

Bourses across emerging markets also gained on the day with Johannesburg leading the rally, up 3.7 percent while the main indexes in Russia and Turkey rose over 1 percent.

Most developing currencies gained against a weaker dollar, pushing the MSCI’s index for emerging currencies to its highest in nearly four months, and South Africa’s rand leading gains with a 1.8 percent rise.

The Russian rouble also rose over 1 percent, recovering from its losses in the previous session on higher oil prices, pushed by a preliminary oil deal agreement between Russia and Saudi Arabia.

The Turkish lira fell 0.3 percent after data showed consumer prices fell in November, bringing the annual rate down from a 15-year high.

A 5 percent surge in oil prices also weighed on the lira along with the Indian rupee, which was the only other major loser among developing world currencies.

In Eastern Europe, the Polish zloty jumped to a 3-week high against the euro even though data showed activity in Polish manufacturing firms fell for the first time in more than four years in November. For GRAPHIC on emerging market FX performance 2018, see For GRAPHIC on MSCI emerging index performance 2018, see

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For RUSSIAN market report, see (Reporting by Agamoni Ghosh in Bengaluru; Editing by Ed Osmond)