LONDON, July 29 (Reuters) - Emerging stocks were set for a second month of gains on Friday though they slipped off 11-month highs after Japan's new stimulus round disappointed markets, while a plunge in oil prices also weighed.
The Bank of Japan opted to modestly increase ETF purchases while keeping rates unchanged, maintaining its base money targets and the pace of other asset purchases.
Emerging stocks tracked developed markets lower, with the MSCI index losing 0.6 percent.
But the index is up slightly on the week and has risen 4 percent in July, thanks to strong inflow momentum into emerging equity funds which took $1.7 billion over the past week, according to JPMorgan. Net outflows stand at $2.1 billion this year after a combined $100 billion loss in 2015 and 2014.
Emerging bond funds meanwhile received $3.5 billion, having absorbed $23.3 billion this year, JPM said.
"EM fixed income benchmarks are giving double digit returns so there is a lot of appetite out there to chase those returns higher still," said Manik Narain, a strategist at UBS.
"Post-BOJ there is a small pullback but it's concentrated on oil-centred emerging markets and the market seems confident the low-yield environment and stabilising emerging growth is consistent with EM assets holding up."
The average emerging dollar bond yield premium over Treasuries contracted more than 20 basis points in July.
The Russian rouble and the Malaysian ringgit fell more than half a percent, as oil prices touched fresh three-month lows, while another oil credit, the Mexican peso, slipped 0.3 percent against the dollar .
Currency weakness could swing Russia's central bank towards keeping interest rates on hold at its meeting on Friday - most analysts expect rates to stay at 10.5 percent, especially after inflation ticked up in June.
Russian stocks fell 0.2 percent while 10-year yields rose a touch, having risen around 40 basis points from early-July
BNP Paribas was among those predicting a cut but it warned the rouble's 5 percent depreciation since mid-July "is a factor that may limit or even delay the size of rate cuts today".
Turkish stocks were set to end the week with gains of almost 5 percent, recovering some of last week's post-coup losses . The lira has risen around 1.7 percent on the week versus the dollar but stayed flat on the day.
The markets were digesting poor data on Turkey's trade deficit, which widened 5 percent in June from a year earlier . The deterioration highlighting Turkey's continued reliance on external capital flows for its current account.
"The current account deficit is expanding at a time when growth is slowing so there are signs fundamental forces were working against the lira even before the coup," Narain said. "I don't feel very excited about the lira at this stage."
Egyptian stock markets were shut but ended Thursday with weekly and monthly gains of 8 percent and 16 percent respectively after news of loan talks with the International Monetary Fund (IMF) and expectations of a currency devaluation.
For GRAPHIC on emerging market FX performance 2016, see link.reuters.com/jus35t
For GRAPHIC on MSCI emerging index performance 2016, see link.reuters.com/weh36s
For GRAPHIC on MSCI emerging Europe performance 2016, see link.reuters.com/jun28s
For GRAPHIC on MSCI frontier index performance 2016, see link.reuters.com/zyh97s
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
Morgan Stanley Emrg Mkt Indx 870.11 -5.41 -0.62 +9.57
Czech Rep 887.73 +0.47 +0.05 -7.17
Poland 1776.04 -12.47 -0.70 -4.47
Hungary 27614.15 -14.32 -0.05 +15.44
Romania 6722.00 +27.91 +0.42 -4.03
Greece 561.52 -1.32 -0.23 -11.06
Russia 915.89 -7.50 -0.81 +20.98
South Africa 46347.98 -42.02 -0.09 +1.20
Turkey 75201.76 -42.30 -0.06 +4.84
China 2979.38 -14.94 -0.50 -15.82
India 28081.95 -126.67 -0.45 +7.52
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 27.03 27.03 +0.00 -0.10
Poland 4.37 4.36 -0.10 -2.47
Hungary 312.23 311.35 -0.28 +0.77
Romania 4.46 4.46 -0.02 +1.27
Serbia 123.12 123.17 +0.04 -1.34
Russia 67.07 66.60 -0.71 +8.77
Kazakhstan 351.40 353.57 +0.62 -3.10
Ukraine 24.81 24.80 -0.03 -3.44
South Africa 14.15 14.13 -0.16 +9.25
Kenya 101.35 101.30 -0.05 +0.84
Israel 3.83 3.82 -0.11 +1.56
Turkey 3.01 3.01 +0.02 -3.13
China 6.65 6.65 -0.01 -2.44
India 67.06 67.00 -0.09 -1.29
Brazil 3.29 3.29 +0.00 +20.41
Mexico 18.97 18.89 -0.41 -9.47
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 386 -2 .02 7 54.76 1
All data taken from Reuters at #N/A The record could not be found GMT. Currency percent change calculated from the daily U.S.
close at 2130 GMT.
Editing by Tom Heneghan