LONDON: Emerging market stocks were on track for their fourth week of gains on Friday, lifted by expectations of more stimulus from the European Central Bank and by further Chinese easing.
MSCI's emerging market stock index snapped a three-day losing streak to rise 1.4 percent to the highest in more than two months, reflecting gains around the globe.
Emerging market stocks added to gains made earlier in the day after China's central bank cut the reserve requirement ratio for banks for the fourth time this year and lowered the interest rate in its latest effort to lift a sagging economy.
"(China's) economy seems to be on a bit of a slowdown trend still, but inflation is not a threat, so they are in a sweet spot for easing just now and they are taking advantage of window," said Ilan Solot at Brown Brothers Harriman.
Appetite for riskier assets had already been rekindled by ECB President Mario Draghi saying on Thursday that the bank's policymakers were "open to the full menu of monetary policy" to stoke the euro zone economy.
"Besides the direct impact of ECB easing, which can be friendly for risk markets, it also reduces the prospect of the (US Federal Reserve) tightening in December," said Manik Narain, strategist at UBS, adding investors were also wondering if the Bank of Japan was considering further easing at its meeting on Oct. 30.
Russian stocks chalked up some of the biggest gains, jumping by 2.5 percent, while bourses across South Africa, Turkey and central and eastern Europe all moved higher. Funds investing in emerging market stocks are on track for monthly gains after five months of losses.
They recorded modest inflows in the week ending Thursday - the second straight week of gains since early July, according to data from EPFR.
In currencies, Russia's rouble firmed 0.8 percent against the dollar, helped by oil prices rising 0.6 percent.
But a strengthening dollar wiped out earlier gains in Turkey's lira and South Africa's rand, which weakened 0.6 and 0.2 percent respectively.
Across central and eastern Europe, currencies were flat to unchanged with the Hungarian forint and the Czech crown struggling a touch higher against the euro.
But Poland's zloty traded unchanged as enthusiasm over possible ECB stimulus was offset by concern over Sunday's general election and uncertainty about economic policy.
The Kazakh tenge firmed after the central bank's chairman Kairat Kelimbetov said he expected the currency to strengthen slightly and then stabilise over the next three to five months after losing a third of its value since August.
The bank also said it would use 1 trillion tenge ($3.6 billion) from the state pension fund next year to support its weak economy.
In Eurobonds, a fresh wave of issues came to market. Angola held its $1.5 billion debut issuance on Thursday.
Namibia sold $750 million the same day and Lebanon mandated banks to work on a dollar issue aimed at tempting investors to swap bonds maturing in January for longer-dated maturities.
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