* Emerging market stocks hit 7-1/2 month high

* Brazil's real climbs more than 2 percent vs USD

By Daniel Bases

NEW YORK, May 19 (Reuters) - Emerging markets held gains
made on the back of a short-lived rally on Wall Street, in a
sign that investors remain hopeful that a rise in commodity
prices will support stronger economic growth ahead.

MSCI's broad emerging markets stock index .MSCIEF rose
2.58 percent to 747.34 while the MSCI Latin American stock
index .MILA00000PUS gained 2 percent to 2,899.26. Both now
sitting at 7-1/2 month highs.

A falling U.S. dollar aided the rise in commodity prices,
which underpin emerging market economies. Crude oil rose more
than 1 percent to $59.65 a barrel CLc1 while gold gained 0.8
percent or $7.35 an ounce to finish over $924.50 XAU=.

Analysts cite China's economic stimulus as one possible
reason for increased commodity prices which in turn help
support emerging markets. But questions remain if this jolt is
akin to a "sugar shock" whereby increased economic activity
will stop as soon as the spending is done.

"There is still scepticism as to how real the recovery in
China is," said Benito Berber, Latin American strategist at RBS
in Greenwich, Connecticut.

"There has not been any sort of indisputable sign of
(global) economic recovery yet, but the flow of bad news
continues to decrease... I don't think there are market
positions that have a lot of conviction behind them," said
Berber.

Wall Street's rally was stopped short as financial shares
sank after the U.S. Senate passed a bill to curb sudden credit
card interest rate increases and hidden fees.

But the impact of the bill, which is expected to hurt
profits of major credit card issuers, occurred too late in the
day to cut short the emerging market rally.

Emerging market credit spreads narrowed 7 basis points to
478 basis points, according to the benchmark JP Morgan EMBI+
index 11EMJ, as investment appetite for riskier assets remain
supported by the view that markets have seen the bottom of the
recession.

But that view could be challenged.

"We are not convinced this latest two-day global asset
rally is sustainable, with our technical strategists warning of
an impending correction window," said RBC Capital Markets.

In the currency markets, Brazil's real surged to a
seven-month high, closing 2 percent stronger at 2.035 reais to
the U.S. dollar. Increasingly strong investment flows are seen
supporting the real as Brazil is viewed as one of the economies
that will rebound stronger and faster than other emerging
economies.

Itau Unibanco vice president and chief of investor
relations Alfredo Setubal told Reuters Television that the
rally in the real is likely to continue as dollar inflows to
the country increase.

"We expect this flow of dollars to continue to go to
Brazil, we expect the economy to grow. So, the probable
scenario in terms of currency is that we are going to see the
real gaining," he said. [ID:nN19449678]

The Mexican peso surged to a six-month high, firming 1.35
percent to 12.9435 per U.S. dollar at the central bank's final
1:30 p.m. local time (1830 GMT) reference, its strongest local
close since mid-November.
(Additional reporting by Vivianne Rodrigues and Walter
Brandimarte in New York; Michael O'Boyle in Mexico City and
Guillermo Parra-Bernal in Sao Paulo; Editing by Diane Craft)