November 1, 2018 / 9:28 AM / 10 months ago

EMERGING MARKETS-China stimulus drives third day of emerging-market gains

* Turkey's lira down after weak PMI

* More stimulus plans support Chinese stocks, yuan

* Czech crown little changed before rate decision

By Sruthi Shankar and Aaron Saldanha

Nov 1 (Reuters) - Emerging-market stocks rose for a third day on Thursday, as Beijing's plan to boost infrastructure spending and a tepid dollar helped the mood after a bruising month for equities globally.

The MSCI index of developing-world stocks rose 0.8 percent and was on track for a one-week high, as Chinese stocks rose on the latest in a round of official measures to support the domestic markets.

Onshore, China's yuan strengthened past 6.95 per dollar. A Reuters poll of analysts showed Chinese authorities will defend the yuan from weakening past 7 per dollar, although some expected the currency to breach that level.

"Yesterday's headlines out of the Politburo in China suggesting that more stimulus may be on the way is perhaps helping sentiment overnight," Deutsche Bank strategist Jim Reid said in a note.

The MSCI EM index ended October with its worst monthly loss in more than three years, battered by worries about the impact on global growth of Donald Trump's trade war with China and rising U.S. interest rates.

Surveys again suggested Chinese manufacturing barely expanded last month, while an extended contraction in export orders highlighted rising pressure on the economy as the trade war intensified.

The Turkish lira edged lower after data showed Turkey's manufacturing activity contracted for the seventh consecutive month in October as output and new orders continued to slow.

The lira took a beating on Wednesday after the government unexpectedly announced a plan to cut taxes on several sectors, including cars, white goods and furniture, until the end of the year, hours after the central bank sharply raised inflation forecasts for this year and next.

"The weakening of the currency does very well reflect the situation. The rally of the past few days and weeks remains quite unjustified by how bad the situation remains in Turkey," said Cristian Maggio, head of emerging markets strategy at TD Securities.

A weaker dollar helped the Russian rouble, which rose 0.4 percent, despite lower oil prices, and the South African rand, which jumped 1.6 percent.

The British pound jumped 1.2 percent on a report that Britain has secured a deal that would give its financial services firms continued access to European markets after Brexit.

The Czech crown was little changed against the euro before an interest rate decision at 1200 GMT. The central bank is expected to raise rates by 25 basis points to 1.75 percent.

Despite a robust economy, past rate hikes have failed to boost the crown, which is down 1.5 percent against the euro this year. A recent poll by Reuters forecast the crown would gain 3.5 percent in the next 12 months, as central banks move towards tighter monetary policy.

Warsaw and Budapest stock exchanges were closed for All Saints' Day holiday.

For GRAPHIC on emerging market FX performance 2018, see

For GRAPHIC on MSCI emerging index performance 2018, see

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Reporting by Sruthi Shankar and Aaron Saldanha in Bengaluru, editing by Larry King)

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