February 13, 2017 / 9:57 AM / 7 months ago

EMERGING MARKETS-Emerging stocks, Russian rouble hit 19-mth highs

LONDON, Feb 13 (Reuters) - The Russian rouble surged to 19-month highs versus the dollar on Monday, supported by oil prices and leading other emerging assets, while emerging equities tracked world stocks higher, also hitting the highest level since July 2015.

Sentiment towards equities and emerging markets was lifted after U.S. President Donald Trump made no mention of currency policy or protectionist measures during his weekend meetings with Japanese Prime Minister Shinzo Abe.

The rouble rose around half a percent to the dollar, leading other emerging currencies, shrugging off recent jitters around Russian authorities’ decision to buy dollars to replenish reserves. The purchases started on Feb. 1.

The unit is also benefiting from oil prices holding around $56 a barrel following OPEC production cuts.

“(Rouble strength) is mostly because of oil, which continues to be well-supported, but also now many people are coming to realise that the dollar purchases in the grand scheme of things won’t make a huge difference,” Unicredit strategist Kiran Kowshik said.

“Many people thought there would be 5-10 percent upside on dollar-rouble due to the purchases, probably many short rouble positions were built, and those may be getting unwound.”

Russian 10-year yields slipped to one-month lows , with data showing that annual inflation slipped to 5 percent in January, approaching the central bank’s 4 percent target for 2017.

As the dollar retreated against a basket of currencies, most other emerging assets also strengthened, with the South African rand and Turkish lira up 0.3-0.5 percent .

Emerging stocks rose half a percent for their fourth straight session in the black, while Asian shares hit 1-1/2-year highs, led by Taiwan and Singapore.

Kowshik noted Trump had avoided ratcheting up protectionist comments in recent days and has instead hinted at ambitious tax cuts.

“Markets are buying into that. They are still focusing on the reflation theme and pricing out protectionist risks,” he added.

Central European currencies did not budge against the euro but Polish stocks rose to new 17-month highs and Hungarian stocks touched a fresh record peak after companies in both countries posted strong results last week.

Asian currencies however weakened earlier in the day, led by the Chinese yuan which was fixed at the weakest level in almost four weeks against the dollar. Offshore-traded yuan also weakened, briefly falling below its onshore counterpart for the first time since early January.

The Indian rupee weakened 0.2 percent before the 1200 GMT release of data, which is expected to show retail inflation at a five-year low in January.

For GRAPHIC on emerging market FX performance 2017, see tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2017, see tmsnrt.rs/2dZbdP5

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

on year

Morgan Stanley Emrg Mkt Indx 934.20 +4.04 +0.43 +8.34

Czech Rep 965.99 +1.68 +0.17 +4.82

Poland 2166.89 +12.10 +0.56 +11.24

Hungary 33231.80 +75.71 +0.23 +3.84

Romania 7659.06 -9.49 -0.12 +8.10

Greece 623.06 -0.73 -0.12 -3.20

Russia 1175.51 +11.30 +0.97 +2.01

South Africa 45999.60 +242.79 +0.53 +4.78

Turkey 87857.62 +384.28 +0.44 +12.44

China 3217.22 +20.52 +0.64 +3.66

India 28306.87 -27.38 -0.10 +6.31

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2017

Czech Rep 27.00 27.01 +0.03 +0.02

Poland 4.30 4.29 -0.16 +2.38

Hungary 308.16 308.01 -0.05 +0.21

Romania 4.50 4.50 -0.05 +0.77

Serbia 123.89 123.77 -0.10 -0.44

Russia 58.07 58.26 +0.33 +5.50

Kazakhstan 321.80 322.61 +0.25 +3.68

Ukraine 27.13 27.20 +0.26 -0.48

South Africa 13.33 13.35 +0.12 +2.98

Kenya 103.52 103.40 -0.12 -1.11

Israel 3.75 3.75 -0.05 +2.61

Turkey 3.69 3.69 +0.02 -4.52

China 6.88 6.88 +0.00 +0.96

India 66.95 66.81 -0.20 +1.49

Brazil 3.11 3.11 +0.00 +4.45

Mexico 20.38 20.34 -0.21 +1.65

Debt Index Strip Spd Chg %Rtn Index

Sov‘gn Debt EMBIG 333 -2 .03 7 60.05 1

All data taken from Reuters at 09:21 GMT. Currency percent change calculated from the daily U.S.

close at 2130 GMT. (Editing by Toby Chopra)

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