March 29, 2019 / 9:53 AM / 21 days ago

EMERGING MARKETS-Stocks set to end quarter on strong note

* China’s stocks and yuan gain, helped by U.S.-China trade hopes

* Index inclusion of onshore Chinese bonds from Monday eyed

* Turkish lira drops 1.1 pct, offshore liquidity eases

By Aaron Saldanha

March 29 (Reuters) - Emerging-market stocks and currencies rose on Friday, aided by increased demand for Chinese assets amid signs of progress at U.S.-China trade talks and a pledge by Beijing to liberalise financial markets.

Optimism was underpinned by U.S. officials concluding “constructive” trade talks in Beijing. U.S. Treasury Secretary Steven Mnuchin said he looked forward to continuing talks with Chinese Vice Premier Liu He in Washington next week.

Chinese stocks had their best day in more than a month, gaining at least 3.2 percent, after Premier Li Keqiang on Thursday pledged China would expand market access for foreign banks and securities and insurance firms.

MSCI’s index of developing-world stocks was up 0.8 percent on the day and on course to end the quarter up 9.1 percent. Shares in export-oriented South Korea and Taiwan rose 0.6 percent and 1 percent, respectively.

China’s yuan-denominated onshore bonds will be included in the Bloomberg Barclays Global Aggregate Index starting Monday. That supported the yuan on Friday amid expectations of a increased foreign investment.

Turkish stocks rose 0.8 percent, primarily on gains among financials, but the lira dropped 1.1 percent as lira liquidity returned to the London foreign-exchange market.

The London overnight swap rate for the lira plunged to 25 percent, down from the 1,200 percent it reached on Wednesday, Refinitiv Eikon data showed.

However, tension between Turkey and the United States grew after U.S. senators introduced a bill on Thursday to prohibit sending F-35 fighter aircraft to Turkey and the Turkish foreign minister said on Friday it would honour a missile system deal with Russia.

A 0.2 percent rise in the price of oil supported Russian stocks and the rouble, which gained 0.3 percent each.

South African stocks rose 0.7 percent and the rand gained 0.3 percent. The currency is poised for a drop, however, with ratings agency Moody’s expected to cut the country’s sovereign rating outlook to negative later on Friday . The other two big rating agencies, S&P and Fitch, already rate the sovereign “junk”.

The South African central bank kept borrowing costs at 6.75 percent on Thursday, saying risks to its inflation outlook were “more or less evenly balanced”.

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Reporting by Aaron Saldanha in Bengaluru, additional reporting by Samuel Shen and John Ruwitch in Shanghai; editing by Larry King)

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