April 3, 2019 / 9:02 AM / 8 months ago

EMERGING MARKETS-Stocks, FX rise as trade optimism boost sentiment

* MSCI’s EM stocks index at near eight-month high

* Turkey’s lira down as rising inflation adds to woes

* Polish central bank interest rate meeting awaited

By Susan Mathew

April 3 (Reuters) - Emerging-market stocks rose on Wednesday to their highest in nearly eight months and currencies rallied as reports of progress in U.S.-China trade talks bolstered risk sentiment.

MSCI’s index of emerging-market stocks rose 0.9 percent and was on course for a fifth straight day of gains. Its currency index climbed 0.3 percent, although losses in Turkey’s lira capped gains.

The latest boost to sentiment came after White House economic adviser Larry Kudlow said United States and China expect to make more headway in trade talks this week.

“Signals suggesting that (U.S.-China) trade negotiations are going the right way is something that is playing a role here,” said Jakob Christensen, chief analyst and head of EM research at Danske Bank.

Most stock markets across the developing world were higher. Mainland China stocks closed up more than 1 percent and shares in Turkey, South Africa and Russia gained 0.8 percent to 0.9 percent.

The currencies of most developing economies gained as the dollar weakened. Most Asian currencies rose and South Africa’s rand climbed 0.6 percent. Higher oil prices helped the Russian rouble rise 0.3 percent.

The rand had rallied after Moody’s struck a surprisingly positive note in a credit opinion on Tuesday, but the currency gave up those gains and finished lower on concern over embattled power company Eskom.

Turkey’s lira slid 0.4 percent. The currency has seen volatile as tension with the Unites States grew and President Tayyip Erdogan’s party lost elections in Istanbul and Anakara.

On Wednesday, data showing Turkey’s annual consumer price inflation rose to 19.71 percent in March added to investor concerns. Inflation had reached a 15-year high above 25 percent in October, during a crisis that wiped nearly 30 percent off the lira’s value.

“The inflation numbers show that challenge that the Turkish economy has with higher oil prices,” Christensen said. “And given Turkey is a large oil importer, it will also worsen balance of trade and demand for dollars, that is of course on top a fairly large debt redemption.”

Poland’s zloty rose 0.1 percent against a stronger euro before a central bank meeting. The bank is expected to keep its key interest rate unchanged, with investors watching for comments on the pace of inflation and upcoming fiscal stimulus.

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 Susan Mathew in Bengaluru;)

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