* EM stocks rally 1.8 percent for best week since October
* Currencies gain as Bank of Japan stimulus boosts mood
* Russia central bank decision, Azerbaijan downgrade in focus
By Marc Jones
LONDON, Jan 29 (Reuters) - Emerging markets ended a torrid January on a high on Friday, with stocks, bonds and most currencies rallying as the Bank of Japan's shock move to sub-zero interest rates proved the big central banks are not out of ammunition just yet.
There was the added benefit of another rise in oil prices as they climbed for a second straight week to allay some of the worst of the fears that have been hanging over the major producer countries.
MSCI's main 23-country emerging markets stock index was up just over 1.8 percent on the day and 3.5 percent on the week, which would make it its best since October.
The majority of the big EM currencies also made ground, with Malaysia's ringgit up 1.6 percent, the rouble up almost 1 percent and the rand and the Mexican peso up 0.7-0.8 percent.
"We have a rally on our hands," said AllianceBernstein senior EM economist, Markus Schneider. "At the end of the day as simple as it is, it has been about commodity prices and the Bank of Japan today."
Investors weren't getting too overexcited however. EM stocks are still down 7.5 percent for January, which is the worst start to a year since the 12.5 percent that slumped during the white-hot phase of the global financial crisis in 2008.
The blow out in bond spreads -- the premium investors demand to hold emerging market bonds rather than ultra-safe U.S. Treasuries -- has been extreme too at roughly 50 basis points, although it had been more like 70 just over a week ago.
Following relief that South Africa had stuck to the monetary policy text books and hiked interest rates on Thursday to combat a spike in inflation focus was now on the Russian central bank's latest policy meeting.
It is likely to leave its main rates on hold, a Reuters poll indicated, as easing monetary policy could exacerbate a bout of rouble weakness that has seen the currency crash to record lows this month.
The bank slashed interest rates by 6 percentage points in the first half of 2015 to mitigate an economic slump exacerbated by Western sanctions over the Ukraine conflict, but has left them on hold since July.
Russian President Vladimir Putin is also set to meet later with both Central Bank Governor Elvira Nabiullina and Finance Minister Anton Siluanov to talk about the country's economic situation, a Kremlin spokesman said.
"I think the Russian central bank is going to send a balanced message today," said AllianceBernstein's Schneider. "I don't think they have completely abandoned the idea of cutting rates but the main thing they are focused on is inflation expectations."
There was also focus on one of Russia's ex-Soviet and oil dependent neighbours Azerbaijan. It is talking about a support programme from the IMF but looks almost certain to lose its investment grade rating with Standard and Poor's later.
"This is not the run-of-the-mill commodities swing, this is something different altogether," S&P's head of EMEA sovereign ratings, Moritz Kraemer, told Reuters last week.
Other oil producers are likely to be waiting nervously too. Kraemer added that S&P was considering whether the "new reality" of low crude prices meant it needed to repeat last year's move when it made a big group of rating cuts all at once.
For GRAPHIC on emerging market FX performance 2016, see link.reuters.com/jus35t
For GRAPHIC on MSCI emerging index performance 2016, see link.reuters.com/weh36s
For GRAPHIC on MSCI emerging Europe performance 2016, see link.reuters.com/jun28s
For GRAPHIC on MSCI frontier index performance 2016, see link.reuters.com/zyh97s
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see )
Editing by Toby Chopra