LONDON, July 13 (Reuters) - Emerging market shares edged toward their first weekly gain in over a month on Friday, though there was some serious damage showing, including the worst week for Turkey's lira since the financial crisis a decade ago.
The rise in shares was helped by China's best week in over two years as well as 2.5-4 percent jumps in India and Indonesia, that as oil importers have been boosted by a 4 percent drop in crude prices this week.
Turkey is also a major oil buyer but its markets have been battered again this week amid worries about re-elected President Tayyip Erdogan's reluctance for the country's central bank to tackle rampant inflation with higher interest rates.
Istanbul's stock market was roughly 0.8 percent higher on the day but was down more than 8 percent for the week. The lira was hovering just off its all-time low against the dollar at 4.85 having fallen almost 6 percent this week too.
State Street Global Advisors' head of currency James Binny said on his firm's purchasing power parity valuation model the lira was now about 32 percent undervalued.
"That is pretty cheap," he said. "On the long-term you perhaps should be going long, but any kind of risk model is going to say you don't want a big position because the volatility is just so high."
He also warned that if investors continued to be frightened off by political inference in the economy, there was a risk it could become "a value trap".
Away from Turkey though and a few other specific trouble spots, the mood in emerging markets has for the most part brightened this week.
China's main share markets have gained 3.1 percent and 3.8 percent respectively making it their best week since June 2016, albeit as the yuan has fallen for the eighth week in the last nine.
Data out of Beijing on Friday showed exports had unexpectedly accelerated in June and its trade surplus with the United States hit a record high.
That was taken as a positive sign for the economy, though the overall result looks set to keep a bitter trade dispute with Washington on the boil for a while longer.
U.S. President Donald Trump has raised the stakes this week detailing plans for 10 percent tariffs on an extra $200 billion worth of Chinese imports, including numerous consumer items.
Mexico's peso is heading for its fourth straight week of gains and South Africa's rand is up for a second week though both were weakening on Friday alongside other EM currencies as the dollar regained traction.
State Street's Binny said that EM currencies as a set are now around 8 percent undervalued having coming into the year at a roughly neutral level.
For comparison they were around 13 percent undervalued at the height of the 2015 "taper tantrum" when the U.S. Federal Reserve pulled back from injecting money into the economy, and 18 percent underpriced during the Asian crises of the 1990s.
Franklin Templeton's chief investment officer of EM equities Manraj Sekhon wrote in a blog post that stocks were looking cheap too.
MSCI's 24-country EM Index had a forward price-to earnings ratio of 11.3x and price-to-book ratio of 1.7x at the start of the month he said, which means it trades at a roughly 25 percent discount to developed markets.
That means EM stocks "remain attractive, in our opinion," he said, adding that "Turkey could offer significant upside in view of its undemanding valuations."
Asia's worst currency performer this year, the Indian rupee , strengthened 0.2 percent to 68.42 to the dollar, marking an end to a week which saw oil prices ease - India imports about 80 percent of its oil. Annual consumer prices also rose 5 percent in June, a five-month high, data this week has shown, bolstering the chance the central bank will again raise interest rates at its next policy meeting in August.
For TOP NEWS across emerging markets
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see)
Editing by Peter Graff