* MSCI EM stocks index at highest level since late-Feb
* Russian stocks among top gainers for the day
* Turkish lira under pressure from higher inflation
* China's yuan strengthens sharply (Adds details on Chinese yuan, updates prices)
By Ambar Warrick
July 6 (Reuters) - Emerging market stocks reached their highest in more than four months on Monday, extending gains into a fifth session as strong economic data spurred bets on a swift economic recovery, with China's yuan touching a 3-1/2 month peak.
The MSCI's index of developing-world stocks rose 1.8% to its highest since Feb. 26, with Chinese stocks the biggest boost to the index as the country's business activity recovered steadily.
The onshore yuan finished trade at 7.0330 per dollar, its strongest close since March 18. A raft of strong factory activity and trade readings from China over last week had underpinned the country's risk assets, with broader emerging markets rising in tow.
Russian stocks led gains among markets in Europe, the Middle East and Africa, on strength in its energy sector. Rising oil prices have helped Russian exporters, as well as the rouble.
"With an unprecedented amount of cash in the system, equities and high-yielding bonds are attracting a lot of interest from investors in the absence of acceptable yield from money markets and longer-term government bonds," Hussein Sayed, chief market strategist at FXTM, wrote in a note.
"To keep this rally alive, we need more intervention from fiscal and monetary policymakers and for investors to believe that policies will be generous enough to provide further liquidity."
Most other emerging-market currencies have diverged from equities over the course of the pandemic, with monetary stimulus measures also hurting returns from FX and fixed income.
Equities have been quicker to recover from the rout thanks to increased cash in the market, leaving currencies in a trough. This was reflected in the day's movement, with most emerging- market currencies gaining little support from the increased risk appetite.
Russia's rouble sank about 0.9% to the dollar due to local dollar demand, as well as the threat of possible British sanctions.
Turkish stocks added about 1.7%, while the lira was flat to the dollar. The currency is likely to face more selling pressure as Turkey struggles to rein in higher inflation bought about by the coronavirus outbreak.
Turkey's central bank had held rates last month, citing upward price pressures caused by the pandemic.
Central European stocks rose while the Hungarian forint and Polish zloty were in a flat-to-low range against the euro.
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Reporting by Ambar Warrick in Bengaluru; Editing by Hugh Lawson