LONDON May 21 (Reuters) - Emerging stocks held steady on Wednesday near 6-1/2 month highs as a decline on Wall Street made investors cautious but Russian assets extended gains, with the rouble hitting a four-month high versus the dollar.
Moscow stocks built on the recent rally fuelled by expectations Ukraine's presidential election on Sunday will pass off peacefully, helping to avert harsher U.S. sanctions on Russia.
Chinese stocks also rose on expectations of market reforms in the coal sector, attracting investors who are keen to switch away from expensive developed stocks.
"The scope for a big rebound in G10 is still limited and that's supporting EM," said Luis Costa, strategist at Citi.
"It looks like we are heading for (Ukraine's) election day without massive conflicts ... We are likely to see a resilient performance (in Russian assets) on the back of market positioning."
He was referring to investors' headlong flight from Russian markets at the height of the stand-off with Ukraine which left them extremely underweight Russia. Many of those funds are now trying to buy back Russian assets because of the high yields they offer.
MSCI's emerging equity index was unchanged on the day. Still, the index has gained more than 3 percent this month.
According to Morgan Stanley, 72 percent of firms listed on the MSCI EM index have reported their first-quarter earnings results, broadly in line with expectations. Around a third of EM firms have beaten consensus estimates.
CHINA, RUSSIA FIRMER
China shares rose 0.8 percent, led by coal stocks after a news report said the National Development and Reform Commission plans to establish two or three national markets for coal trading.
Turkish stocks rose half a percent and the lira rose 0.1 percent to 2.11 ahead of a central bank interest rate decision on Thursday.
All but two economists in a Reuters poll predicted the Turkish central bank will keep its one-week repo rate unchanged at 10 percent. One economist forecast a 25 basis point cut and another predicted a 50 basis point cut.
The central bank has repeatedly said it will keep monetary policy tight until the inflation outlook improves significantly.
In Moscow, equities rose by up to 0.4 percent while the rouble was steady at 34.51 per dollar, after earlier hitting a four-month high of 34.45.
Top gas producer Gazprom rose more than 1 percent on expectations that Russia and China would sign a long-awaited and crucial gas supply deal. Russian Deputy Prime Minister Arkady Dvorkovich said he hoped a deal with China would be prepared in the "next few hours", ready for signing.
For GRAPHIC on emerging market FX performance 2014, see link.reuters.com/jus35t
For GRAPHIC on MSCI emerging index performance 2014, see link.reuters.com/weh36s
For GRAPHIC on MSCI emerging Europe performance 2014, see link.reuters.com/jun28s
For GRAPHIC on MSCI frontier index performance 2014, see link.reuters.com/zyh97s
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see ) (Additional reporting by Sujata Rao; Editing by Susan Fenton)