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EMERGING MARKETS-Oil gains push rouble past Ukraine tensions; stocks rise

* EMEA FX muted

* EM stocks gain as economic recovery hopes grow

* BlackRock optimistic on EM in 2021

April 20 (Reuters) - Russia’s rouble was supported by stronger oil prices on Tuesday, but gains were limited as tensions with Ukraine ramped up, while emerging market stocks rose on improving sentiment over a global economic recovery.

The rouble added about 0.2% as oil prices rose on the prospect of improving global demand. But the currency has marked volatile sessions after the United States imposed sanctions on Russia last week.

Tensions escalated on Monday after Moscow was said to have assembled more than 100,000 troops on Ukraine’s border. An ongoing row with the Czech Republic also has the potential to dampen sentiment over Russian financial markets.

“The U.S. has already imposed fresh sanctions on Russia and any military move would see these escalated. However, so far they have had no impact on Moscow, and the most painful sanctions mean pain for the West too, and even risk fragmenting the global financial system,” Rabobank analysts wrote in a note.

Russian stocks came about 0.2% off record highs. Weakness in the rouble and recent U.S. sanctions targeting Russian debt has seen investors pivot into Russian equities to maintain exposure to the country.

Emerging market stocks rose, with Asian equities supporting the MSCI’S index of equities as economic prospects over the region improved.

Broader emerging market currencies were muted on Tuesday, as weakness in the dollar was offset by a damaging second wave of COVID-19 cases. Countries including India, Brazil, Turkey and parts of central Europe are all dealing with a spike in infections and deaths.

Rising U.S. Treasury yields had pressured emerging market assets this year, with most currencies trading lower as U.S. debt appeared more attractive. Recent drops in yields however, have been positive for EM assets.

BlackRock analysts said stabilizing U.S. yields and relatively cheap valuations would help EM assets after a weak start to the year.

In Europe, the Middle East, and Africa, Turkey’s lira traded flat, staying within a tight range seen over the past few days after the central bank struck a dovish tone at its recent policy meeting.

Turkish Finance Minister Lutfi Elvan said on Monday there would be benefits to releasing the central bank's past forex trading data, which are at the centre of the political opposition's push for the government to account for $128 billion in sales. For GRAPHIC on emerging market FX performance in 2021, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see tmsnrt.rs/2OusNdX

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For CENTRAL EUROPE market report, see

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For RUSSIAN market report, see (Reporting by Ambar Warrick in Bengaluru; Editing by Shailesh Kuber)

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