February 6, 2020 / 9:47 AM / 19 days ago

EMERGING MARKETS-Stocks hit over 1-week high on China's tariff cut for U.S. imports

* China to halve tariffs on some U.S. imports

* EM stocks index headed for best week in 15 months

* Turkey’s Pegasus shares fall after accident

By Shreyashi Sanyal

Feb 6 (Reuters) - Stocks in emerging markets rose to a more than one-week high on Thursday, as China’s announcement to halve additional import tariffs on some U.S. goods supported hopes that an economic hit from the coronavirus outbreak could be dodged.

China’s finance ministry said from Feb. 14, additional tariffs levied on some U.S. goods will be cut to 5% from 10% and others lowered to 2.5% from 5%.

MSCI’s index for emerging market stocks climbed 1.3%, heading for a third straight session of gains and its best week in 15 months.

Risk assets in the developing world enjoyed a round of buying after the world’s two biggest economies called truce in their trade war, with the emerging markets equity index posting a 7% rise in December, its biggest monthly gain in 11 months.

“Whether this will translate into a ‘Phase 2’ U.S.-China trade agreement remains to be seen. However, this action was sufficient enough to lift investors’ sentiment,” Hussein Sayed, chief market strategist at FXTM, wrote in a note.

Despite the general tone of optimism in financial markets, Sayed said the risks were still high as the impact from the epidemic in China remained elusive.

“If China’s growth drops by 1%-2%, the shock will ripple globally and will definitely be reflected in corporate earnings.”

The death toll from the fast-spreading virus in mainland China jumped by 73 to 563, with more than 28,000 confirmed infections there.

Turkish stocks rose 0.7%, with the country’s third-largest bank, Yapi Kredi, leading the advance.

However, Italy’s top bank UniCredit said it would place on the market a 12% stake in the Turkish bank.

Shares of Turkey’s Pegasus Airlines slipped over 4% after an accident a day earlier at Istanbul’s Sabiha Gokcen airport that killed three people and injured 180.

Major emerging market currencies - Turkey’s lira, Russia’s rouble and South Africa’s rand - eased against the dollar.

The Polish zloty also eased a day after rising to a two-week high as the central bank reiterated that its main interest rate will most likely stay at a record low until 2022.

For GRAPHIC on emerging market FX performance in 2020, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2020, 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 Shreyashi Sanyal in Bengaluru; Editing by Subhranshu Sahu)

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