* Indian stocks up more than 5% on big corporate tax cut
* China cuts new benchmark rate for a second month
* Rouble eyes third week of gains tracking higher oil prices
By Agamoni Ghosh
Sept 20 (Reuters) - A surge in Indian shares led emerging markets higher on Friday, after the government announced deep cuts in corporate taxes to revive flagging growth, while a widely expected domestic interest rate cut from China added to the chipper mood.
Indian shares surged 5% and were set for their best day in over a decade after Finance Minister Nirmala Sitharaman said the effective corporate tax rate would be lowered to about 25% from 30% and scrapped the minimum alternative tax for domestic companies.
The move is aimed at reviving private investment, which may help lift growth for Asia's third-largest economy from a six-year low that has caused job losses and fuelled discontent.
"It is an additional measure after the bank mergers and the capital infusion but potential growth is still on a downward trajectory," said Hugo Erken, head of international economics at Rabobank.
Growth "will struggle to push that 7% threshold unless a large scale stimulus package comes by," he said.
That surge helped MSCI's index for emerging market stocks rise 0.5%, with the rupee also the star performer among emerging currencies, strengthening 0.6%.
Adding to stimulus hopes was a cut in China's key domestic lending rate for the second month in a row, aimed at lower borrowing costs for companies and consumers in the slowing economy.
China's two main share indexes moved 0.3% higher but ended the week lower as Beijing's stance on overall monetary easing was seen as cautious with policymakers remaining reluctant to join a global stimulus wave.
Indices outside Asia were mixed with Moscow stocks shedding 0.4% but those in Johannesburg and Istanbul moving 0.3% higher.
Most developing world currencies marched higher against as feeble dollar with South Africa's rand up 0.4%, recovering ground it lost in the previous session after the central bank left its main interest rate on hold at 6.5%.
Russia's rouble strengthened 0.3%, on course to deliver a third week of gains as oil prices headed for their biggest weekly gain in months.
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