LONDON, May 11 (Reuters) - A sharp rebound in oil prices helped lift emerging equities towards a two-year high on Thursday and boosted the currencies of oil producers Russia and Kazakhstan, whilst a weaker dollar allowed other currencies to make gains.
MSCI's benchmark emerging stocks index rose 0.6 percent, tracking recent gains in MSCI's global stocks benchmark which held near all time-highs after oil prices jumped back above $50 a barrel.
Brent crude futures rose 0.8 percent, extending Wednesday's 3 percent gains on the back of the biggest one-week drop in U.S. inventories so far this year and the decision by Iraq and Algeria to join Saudi Arabia in supporting an extension to OPEC supply cuts.
The rise in oil prices lifted the Russian rouble to a one-week high against the dollar, firming 0.6 percent after gains of 1.6 percent on Wednesday. The Kazakhstan tenge firmed 0.9 percent.
The South African rand was also trading at a one-week high helped by a rise in precious metals prices. The currency firmed 0.6 percent against the dollar, having gained over 1 percent on Wednesday.
"We are seeing relief with commodity prices trading higher," said Piotr Matys, emerging markets FX strategist at Rabobank, but he added these were likely to be short-term gains as commodity prices could weaken again. Iron ore futures in China dipped to a four-month low on Wednesday before recovering at the close.
"There is a risk of another leg lower in commodities in the coming weeks or months," he said. "That will be a negative signal for the Russian rouble and the South African rand, and in South Africa political risk prevails as well."
South Africa's credit ratings were downgraded to junk after President Jacob Zuma sacked finance minister Pravin Gordhan. On Wednesday, Zuma requested legal permission to appeal against a court order to explain his decision.
The country also remains hampered by civil unrest. Protests over jobs and housing have spread to the capital.
The Turkish lira strengthened 0.5 percent, extending Wednesday's 1 percent gains. Latest data showed the current account deficit widened to $3.057 billion in March, less than forecast.
Equities in emerging markets in Europe also pushed higher, with Czech stocks up 0.6 percent on the back of strong earnings, as the shares of energy group CEZ gained 2.2 percent.
Polish stocks rose 1 percent, helped by better-than-expected earnings from media group Cyfrowy Polsat , whose shares leapt over 3 percent.
The broad-based rally followed earlier gains in Asia, where South Korean stocks climbed 1.1 percent and the won firmed 0.4 percent on hopes that the expansionary fiscal policies of President Moon Jae-In's new government would boost the economy.
Hong Kong stocks rose 0.4 percent to a fresh 21-month high, and Chinese mainland stocks closed up 0.6 percent after the central bank said it would inject funds via its medium-term lending facility on Friday. Indian stocks also extended their record-breaking run. 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
Morgan Stanley Emrg Mkt Indx 1000.91 +5.82 +0.58 +16.08
Czech Rep 1015.51 +5.49 +0.54 +10.19
Poland 2405.86 +25.61 +1.08 +23.51
Hungary 33700.22 +33.94 +0.10 +5.30
Romania 8373.07 +53.41 +0.64 +18.18
Greece 796.42 +4.45 +0.56 +23.74
Russia 1113.01 +1.37 +0.12 -3.41
South Africa 47516.33 -119.25 -0.25 +8.23
Turkey 95923.69 -270.51 -0.28 +22.76
China 3061.74 +8.95 +0.29 -1.35
India 30312.35 +64.18 +0.21 +13.84
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 26.60 26.56 -0.12 +1.55
Poland 4.22 4.21 -0.17 +4.45
Hungary 310.52 310.35 -0.05 -0.55
Romania 4.55 4.55 +0.06 -0.30
Serbia 123.00 123.13 +0.11 +0.28
Russia 57.07 57.43 +0.62 +7.35
Kazakhstan 315.65 318.52 +0.91 +5.70
Ukraine 26.43 26.43 +0.01 +2.17
South Africa 13.38 13.47 +0.67 +2.64
Kenya 103.25 103.30 +0.05 -0.85
Israel 3.61 3.60 -0.37 +6.56
Turkey 3.58 3.59 +0.29 -1.38
China 6.90 6.90 -0.02 +0.59
India 64.36 64.59 +0.36 +5.57
Brazil 3.17 3.17 -0.01 +2.72
Mexico 18.92 19.01 +0.48 +9.49
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 315 1 .03 7 79.50 1
Additional reporting by Karin Strohecker; Editing by Raissa Kasolowsky