EMERGING MARKETS-Stocks eye monthly gains on China rebound, currencies steady ahead of US inflation test

Turkey's economy grew 4.5% last year and 4.0% in the fourth quarter, beating expectations as strong domestic demand offset fallout from devastating earthquakes and a slowdown in main trading partners. A broader gauge of EM currencies was flat at 1,726.73 points as caution prevailed ahead of the release of the Federal Reserve's preferred inflation gauge later in the day - the personal consumer expenditures (PCE) price index, which is expected to set the tone for rate cut expectations in the world's biggest economy.

Emerging market stocks eyed strong monthly gains on Thursday, with a Chinese recovery fuelling the bulk of the gains, while most currencies were range-bound ahead of key U.S. inflation data, which is likely to set the tone for rate cut expectations.

At 0901 GMT, MSCI's index for emerging market (EM) stocks was up 0.1%, on track for a monthly advance of 4.5%, its best February performance since 2012. Mainland Chinese shares closed 1.9% higher following a more than 1% fall in the previous session, with a monthly gain of 9.4% snapping a six-month losing streak.

"Investor sentiment has stabilised since China's markets reopened, in part supported by positive retail spending and travel data from the holiday period," Wee Khoon Chong, APAC market strategist at BNY Mellon, wrote. State-led buying and tighter regulations have been primarily responsible for pulling China's blue-chip index off five-year lows, but more aggressive stimulus is needed for the momentum to continue amid a moribund economy.

Stocks in emerging Europe also had a bright start, with Turkey's main index gaining 0.7%, while shares in Warsaw jumped 1.2%. Turkey's economy grew 4.5% last year and 4.0% in the fourth quarter, beating expectations as strong domestic demand offset fallout from devastating earthquakes and a slowdown in main trading partners.

A broader gauge of EM currencies was flat at 1,726.73 points as caution prevailed ahead of the release of the Federal Reserve's preferred inflation gauge later in the day - the personal consumer expenditures (PCE) price index, which is expected to set the tone for rate cut expectations in the world's biggest economy. Hungary's forint edged 0.2% higher against the euro, though was on track to be the worst performing currency amongst local peers this month.

Earlier in the week, the National Bank of Hungary (NBH) slashed its base rate by 100 basis points to 9%. The Polish zloty eased 0.1%, while the Czech crown also lost 0.1%.

Weakness in the dollar helped South Africa's rand rise 0.4%, with Israel's shekel also gaining 0.6%. Meanwhile, Western powers butted heads over how to handle frozen Russian assets on Wednesday as G20 finance ministers kicked off a discussion of challenges for the global economy, trying to set aside deep geopolitical divisions.

The discussions will continue later in the day. HIGHLIGHTS:

** China rolls over $2 bln loan to Pakistan, finance minister says ** India, South Africa block major investment deal at WTO talks

For TOP NEWS across emerging markets For CENTRAL EUROPE market report, see

For TURKISH market report, see For RUSSIAN market report, see

 

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