January 8, 2018 / 10:00 AM / 15 days ago

EMERGING MARKETS-Emerging stocks grind higher, FX suffer as dollar steadies

LONDON, Jan 8 (Reuters) - Emerging stocks extended their power-run on Monday for a fifth straight session, flirting with near-decade peaks, though currencies took a step back following a stellar start to the week as the dollar regained its footing.

MSCI’s emerging markets benchmark rose 0.3 percent to hit a fresh 6-1/2 year high, and only a few points away from levels last seen in May 2008.

Heavyweight Korea added 0.6 percent to pull the benchmark higher while the Philippines has already traded at a record. In Turkey, stocks gained 0.7 percent after fresh data showed industrial output rose 7 percent year-on-year in November.

Meanwhile currencies had a more downbeat start to the week .

South Africa’s rand weakened nearly 1 percent, while Turkey’s lira softened 0.5 percent. However, the falls follow a stellar start to the year and point to a consolidation, said Per Hammarlund, chief emerging markets strategist at SEB.

“The strong dollar is dominating but it’s not enough to really shake the market,” said Hammarlund, adding the benign macro backdrop for emerging markets was still intact.

And latest data from China, showing that FX reserves jumped by a forecast-beating $20 billion to hit $3.14 trillion – their highest since September 2016 - confirmed the bull run could continue, he added.

“There is no sign of capital flight from China, so things are going well. That supports risk appetite for emerging markets in general – China is the bellwether to watch,” said Hammarlund.

A blizzard of data out of China this week is expected to show the world’s second largest economy ended a strong 2017 on a slightly softer note.

Much of the focus will be on Friday’s trade figures for December with exports expected to have jumped more than 9 percent after soaring unexpectedly 12.3 percent in November thanks to sustained strength in global demand.

In emerging Europe, Romania’s central bank is meeting. A slim majority of analysts is expecting interest rates to stay at a record low of 1.75 percent, while others predict the bank may become the second in Central Europe to start to raise, after the Czech central bank’s two hikes since August.

The leu traded close to the two-month high against the euro of the previous session.

For GRAPHIC on emerging market FX performance 2017, see tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2017, see 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 1205.45 +4.44 +0.37 +4.06

Czech Rep 1109.70 +4.38 +0.40 +2.93

Poland 2533.39 +3.84 +0.15 +2.93

Hungary 40013.76 +18.60 +0.05 +1.62

Romania 7977.06 -8.76 -0.11 +2.88

Greece 825.79 -3.93 -0.47 +2.92

Russia 0.00 +0.00 +0.00 -100.00

South Africa 52891.63 +48.95 +0.09 +0.68

Turkey 17391.12 +753.19 +0.65 +1.78

China 3410.00 +18.25 +0.54 +3.11

India 34363.11 +209.26 +0.61 +0.90

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2018

Czech Rep 25.54 25.52 -0.05 -0.04

Poland 4.16 4.15 -0.26 +0.30

Hungary 308.94 308.34 -0.19 +0.51

Romania 4.63 4.63 -0.15 +0.95

Serbia 118.34 118.64 +0.25 +0.05

Russia 57.07 56.94 -0.22 +1.04

Kazakhstan 330.17 329.80 -0.11 +0.80

Ukraine 28.19 28.19 +0.00 -0.16

South Africa 12.38 12.29 -0.73 -0.18

Kenya 103.15 103.20 +0.05 -0.05

Israel 3.44 3.43 -0.28 +1.09

Turkey 3.75 3.73 -0.34 +1.13

China 6.50 6.49 -0.17 +0.12

India 63.41 63.33 -0.13 +0.66

Brazil 3.23 3.23 +0.00 +2.58

Mexico 19.19 19.17 -0.10 +2.38

Debt Index Strip Spd Chg %Rtn Index

Sov‘gn Debt EMBIG 299 1 .01 8 10.75 1

All data taken from Reuters at 09:52 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT. (Reporting by Karin Strohecker, additional reporting by Claire Milhench; Editing by Robin Pomeroy)

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