Emerging stocks at new 6-yr high, currencies firm on Fed doubts

Emerging stocks at new 6-yr high, currencies firm on Fed doubts
By Karin Strohecker

LONDON, Oct 12 (Reuters) - A retreating dollar, solid commodity prices and new record highs for world stocks helped extend the rally in emerging markets on Thursday, with stocks at new six-year highs and currencies firming almost across the board

MSCI's emerging equity index, which has gained 30 percent since the start of 2017, sailed 0.5 percent higher to its strongest level since August 2011 after Asian markets took a cue from Wall Street's record close to hit a near 10-year high .

The greenback hit a two-week low after the minutes of the latest U.S. central bank meeting revealed policymakers' concern over persistently low inflation and raised doubts about an interest rate hike expected in December.

"The Fed minutes seem to have been taken as more dovish than expected and that is positive for emerging markets," Crédit Agricole's senior emerging market strategist Guillaume Tresca, said.

Currencies shrugged off the weakness they suffered in recent weeks, with JPMorgan's ELMI Plus index, a proxy for emerging currencies, on track for weekly gains after four weeks of losses.

"We saw a good emerging markets sell-off over the last two weeks, so there is a bit of a consolidation," Tresca added.

Adding to the chipper mood, copper prices touched their strongest in four weeks, while oil -- a touch softer on the day -- rose in the previous three sessions.

South Africa's rand gained 0.4 percent to its strongest level in 13 days, and was on track for its best week since July. Turkey's lira and Russia's rouble both matched the gains.

Mexico's peso traded flat, however, with investors nervous as the United States, Canada and Mexico kicked off the fourth round of talks about the future of the North American Free Trade Agreement (NAFTA)on Wednesday. The peso has firmed more than 10 percent this year.

U.S. President Donald Trump said he would be open to bilateral trade deals with Canada and Mexico if NAFTA talks between the three countries fall apart.

"There are only negative signs (from the NAFTA talks). Discussions look difficult so it could cap the peso's appreciation," said Tresca.

He added that a collapse of the talks would be negative but the current environment of low interest rates and strong sentiment towards emerging markets could soften the blow.

For GRAPHIC on emerging market FX performance 2017, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2017, see http://tmsnrt.rs/2dZbdP5

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 1122.58 +5.25 +0.47 +30.19

Czech Rep 1054.62 +0.25 +0.02 +14.43

Poland 2546.11 -5.67 -0.22 +30.71

Hungary 38545.42 +92.30 +0.24 +20.44

Romania 8004.79 -0.05 +0.03 +12.98

Greece 748.29 -0.32 -0.04 +16.26

Russia 1145.00 +1.68 +0.15 -0.64

South Africa 51269.97 -168.58 -0.33 +16.78

Turkey 05144.38 +1328.34 +1.28 +34.56

China 3387.65 -0.64 -0.02 +9.15

India 32034.70 +200.71 +0.63 +20.31

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2017

Czech Rep 25.88 25.87 -0.02 +4.37

Poland 4.27 4.27 +0.01 +3.18

Hungary 309.19 308.99 -0.06 -0.12

Romania 4.59 4.58 -0.09 -1.13

Serbia 119.27 119.39 +0.10 +3.42

Russia 57.66 57.78 +0.20 +6.25

Kazakhstan 334.27 335.07 +0.24 -0.19

Ukraine 26.60 26.55 -0.19 +1.50

South Africa 13.47 13.52 +0.38 +1.96

Kenya 103.15 103.30 +0.15 -0.76

Israel 3.48 3.49 +0.09 +10.52

Turkey 3.64 3.65 +0.34 -2.98

China 6.58 6.59 +0.04 +5.44

India 65.07 65.15 +0.12 +4.42

Brazil 3.17 3.17 +0.03 +2.59

Mexico 18.70 18.70 -0.01 +10.78

Debt Index Strip Spd Chg %Rtn Index

Sov'gn Debt EMBIG 305 0 .13 8 05.36 1

All data taken from Reuters at 09:06 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT.

(Reporting and graphic by Karin Strohecker, additional reporting by Marc Jones; Editing by Catherine Evans)

2017-10-12 11:38:59

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