* EM stocks index bounces after worst day in 5 months
* China vows to tighten containment measures for virus
* S.Africa annual inflation rises in December
By Shreyashi Sanyal
Jan 22 (Reuters) - Emerging market stocks regained footing on Wednesday after China’s response to contain a virus outbreak eased fears of a global pandemic, while the South African rand treaded water after a reading on inflation.
The death toll from a new flu-like coronavirus in China rose to nine on Wednesday with 440 confirmed cases but investor anxiety was calmed as China vowed to tighten containment measures in hospitals.
MSCI’s index for emerging market stocks rose 0.6%, a day after seeing its worst session since early August.
“Amid hopes that the authorities in affected countries are better equipped this time around following other epidemics over the years, the losses in risk assets should prove transitory as long as investors’ fears can be reined in,” Han Tan, market analyst at FXTM wrote in a client note.
The viral outbreak tested risk appetite on Tuesday, although most analysts point to the recent losses being temporary even as investors grapple with its potential implications for the global economy.
Market players in the emerging markets space have recently enjoyed some calm after trade tensions between the United States and China cooled and both sides signed an initial trade deal last week.
Currencies in the developing world remained range bound with the MSCI’s index for emerging market currencies trading flat.
South Africa’s rand firmed slightly against the dollar as data showed headline consumer price inflation quickened in December and was in line with expectations of economists polled by Reuters.
However, the reading could leave still room for the South African Reserve Bank (SARB) to cut its main lending rate. The SARB unexpectedly cut its main lending rate last week to stimulate the flagging economy as it lowered its inflation forecasts significantly.
Turkey’s lira and the Russian rouble traded in tight spaces against the dollar. Currencies in eastern and central Europe - Hungary’s forint, Poland’s zloty and the Czech crown - eased mildly against the euro.
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For RUSSIAN market report, see (Reporting by Shreyashi Sanyal in Bengaluru; Editing by Toby Chopra)