August 14, 2014 / 11:25 AM / in 3 years

EMERGING MARKETS-Russian stocks rise, C.Europe FX steady after GDP

LONDON, Aug 14 (Reuters) - Russian stocks rose on Thursday as investors hoped for an improvement in relations between Russia and Ukraine, while central European currencies were steady after mixed growth data.

Russian President Vladimir Putin said in a speech in Crimea that Russians needed to mobilise for benefit of their country, but not for conflict with outside world.

Investors have been concerned over the delivery of Russian aid to eastern Ukraine. A senior official of the International Committee of the Red Cross (ICRC) was travelling to Kiev and Moscow on Thursday for talks, saying the delivery of aid “should not be politicised”.

Meanwhile, the leader of pro-Russian rebels in Ukraine’s Luhansk region announced his resignation, becoming the second senior rebel to quit in the space of seven days.

Russian stocks rose 0.6 percent and the rouble was steady.

Ukraine’s hryvnia, which has been hitting record lows, fell more than 1 percent.

Investors are once more becoming worried about the sustainability of Ukraine’s debt, with five-year credit default swaps approaching the 1,000-bp level that indicates distressed debt, according to data from Markit.

The MSCI emerging equities index was stable having hit its highest level in nearly two weeks in the previous session.

Emerging sovereign debt spreads edged out by 1 basis point to 315 bp over U.S. Treasuries.

The forint was stable after data showing stronger than expected growth in Hungary in the second quarter, with the leu and the zloty also flat after weaker than expected Q2 GDP data for Romania and in-line data for Poland.

Investors are anxious about the outlook for central Europe due to the impact of Western and Russian tit-for-tat sanctions.

“We don’t expect the recovery in central and eastern Europe to go into reverse over the coming months and quarters, but growth is likely to remain slower than the rates seen at the start of this year,” analysts at Capital Economics said in a client note.

The Turkish lira weakened 0.25 percent after data showing Turkey’s current account deficit widened in June to $4.09 billion.

The shekel rose a quarter of a percent as a renewed truce in Gaza between Israel and Hamas appeared to be holding.

Shares in Qatar’s Mesaieed Petrochemical surged in heavy trade after MSCI said it had added the stock to its MSCI All-Country World Index.

Mesaieed’s shares jumped as much as 10 percent - their daily limit - in early trade. Qatari stocks hit two-month highs before trimming gains.

Egyptian stocks edged up to fresh six-year highs, helped by expectations of more Gulf aid for Egypt.

For GRAPHIC on emerging market FX performance 2014, see

For GRAPHIC on MSCI emerging index performance 2014, see

For GRAPHIC on MSCI emerging Europe performance 2014, see

For GRAPHIC on MSCI frontier index performance 2014, see

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see ) (Editing by Kevin Liffey)

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