* Polish c.bank has no reason to cut rates -analyst
* MSCI EM stocks index set for best day in nearly 2 weeks
* Russian energy stocks surge on oil strength
By Ambar Warrick
June 16 (Reuters) - Emerging markets stocks rose on Tuesday as risk appetite was boosted by the launch of the U.S. Federal Reserve’s corporate bond buying programme, but currencies lagged with investors still cautious about the speed of economic recovery.
The MSCI index of developing world stocks rose more than 2% and was set for its strongest day in nearly two weeks, tracking overnight strength on Wall Street
Global equities broke out of a week-long trough, which had been spurred by fears of a resurgence in coronavirus cases and persistent worries over a sluggish economic recovery from the pandemic.
Emerging markets had come under pressure last week, retreating from three-month highs as the jitters prompted some profit taking.
Polish stocks were 2.5% higher and leading gains in emerging markets ahead of an interest rate decision from the country’s central bank. The bank unexpectedly cut rates last month to buffer the economy from the coronavirus and analysts were not expecting further easing on Tuesday.
“The bank has already cut the rate to technical zero and launched bond purchase programmes. We cannot see any reason why the central bank would need to urgently do more, unless of course, there were to be a second shock down the road,” Tatha Ghose, FX and EM analyst at Commerzbank wrote in a note.
The zloty retreated slightly versus the euro.
Markets were also awaiting a testimony from Fed Chair Jerome Powell later in the day.
“Investors may be eager to find out whether the Fed remains willing to do more in order to support economic activity hit by the pandemic,” Charalambos Pissouros, Senior Market Analyst at JFD Group wrote in a note.
“If so, equities and risk-linked currencies are likely to continue their journey north.”
Russian shares added more than 1%, propped up by heavyweight energy stocks as oil prices edged higher. The rouble traded slightly lower versus the dollar.
Hungarian stocks rose 1.9%, while the forint retreated slightly versus the dollar.
South African markets were closed for a holiday.
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For RUSSIAN market report, see (Reporting by Ambar Warrick in Bengaluru; Editing by Kirsten Donovan)