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EMERGING MARKETS-Stellar growth lifts emerging Europe FX; stocks rally
May 16, 2017 / 9:24 AM / 4 months ago

EMERGING MARKETS-Stellar growth lifts emerging Europe FX; stocks rally

LONDON, May 16 (Reuters) - The Czech crown led gains among eastern European currencies on Tuesday, hitting a new 3-1/2-year high after data showing buoyant economic growth, while broader emerging stocks firmed for the seventh straight day.

The dollar slipped after the New York Federal Reserve’s barometer on business activity turned negative in May for the first time since October, possibly heralding a manufacturing downturn.

Along with oil prices holding above $52 a barrel, this gave emerging markets enough fuel to build on recent gains, with the MSCI index touching a new two-year high. Chinese mainland shares rose for the fourth day after the central bank injected cash to relieve tight liquidity .

The Czech crown, which only last month saw the lifting of an exchange rate cap, rose as much as 0.25 percent to the euro to after data showed the economy growing 2.9 percent year-on-year on the first quarter.

Hungary grew 4.1 percent, Romania’s output surged 5.7 percent and Poland also beat forecasts, posting 4 percent GDP expansion in the first quarter.

The Hungarian forint inched to a seven-week high and the Polish zloty hit the highest level since Sept 2015

“Really impressive first quarter growth data coming through across emerging Europe this morning, which is sending a message of a Europe which is healing, both politically, but also economically,” said BlueBay strategist Tim Ash.

Prague stocks jumped half a percent to the highest since September 2015. Bond yields across the region rose, with 10-year yields gaining 3-5 basis points.

The data continue a trend also seen in Asia and Latin America of strong first quarter growth - Thailand for instance this week said growth accelerated to a four-year high while Brazil said its economy grew 1.1 percent, recovering from a two-year recession.

This recovery is starting to be reflected in earnings - with more than 70 percent of emerging market firms having already reported results. Thomson Reuters data showed 47 percent had beaten earnings forecasts and 5 percent had met them.

“The next three months look relatively benign given that the equity investors are probably waiting for the next earnings season given last one was relatively good globally,” said Simon Quijano-Evans, a strategist at L&G Investment Management.

On debt markets, dollar bonds from the International Bank of Azerbaijan fell 1.5 cents after the state-run lender which has announced a debt restructuring was downgraded by Moody’s .

Senegal was marketing its first dollar bond since 2014, with price guidance for 15-year issue in the 6.50 percent area.

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 1012.64 +2.41 +0.24 +17.44

Czech Rep 1025.02 +4.51 +0.44 +11.22

Poland 2337.27 -39.88 -1.68 +19.99

Hungary 34362.17 -99.85 -0.29 +7.37

Romania 8453.21 -7.08 -0.08 +19.31

Greece 786.86 +4.54 +0.58 +22.25

Russia 1118.24 -1.74 -0.16 -2.96

South Africa 47366.72 -70.10 -0.15 +7.89

Turkey 96051.35 +463.60 +0.49 +22.92

China 3113.50 +23.27 +0.75 +0.32

India 30548.70 +226.58 +0.75 +14.73

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2017

Czech Rep 26.39 26.45 +0.25 +2.35

Poland 4.19 4.20 +0.14 +5.13

Hungary 308.63 308.74 +0.04 +0.06

Romania 4.54 4.55 +0.11 -0.21

Serbia 123.04 123.03 -0.01 +0.25

Russia 56.26 56.33 +0.13 +8.90

Kazakhstan 312.21 312.89 +0.22 +6.87

Ukraine 26.42 26.42 +0.00 +2.20

South Africa 13.09 13.17 +0.63 +4.90

Kenya 103.25 103.10 -0.15 -0.85

Israel 3.59 3.60 +0.30 +7.19

Turkey 3.55 3.55 +0.01 -0.57

China 6.89 6.89 +0.01 +0.78

India 64.09 64.04 -0.08 +6.01

Brazil 3.11 3.11 +0.04 +4.62

Mexico 18.63 18.70 +0.34 +11.19

Debt Index Strip Spd Chg %Rtn Index

Sov‘gn Debt EMBIG 314 -1 .00 7 83.04 1

All data taken from Reuters at 08:58 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT. (additional reporting by Karin Strohecker)

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