LONDON, Sept 4 (Reuters) – Turkey and Poland were among the
stronger regional performers on Monday as emerging stocks hit
fresh two-week highs in the aftermath of the European Central
Bank’s plan last week to buy peripheral euro zone debt.
Benchmark emerging equities have risen more than
3.5 percent since the ECB detailed its plan on Thursday, in a
stampede to risky assets.
Emerging sovereign debt spreads steadied at 302
basis points over U.S. Treasuries on Monday, just above their
tightest levels in 14 months.
The pace of gains eased, however, as investors awaited a
Federal Reserve policy meeting later this week. Below-forecast
U.S. jobs data on Friday fanned speculation the Fed may launch
more monetary stimulus.
“The announcement of QE3 this week would cement the much
more constructive tone for global emerging markets,” said SEB
analysts in a client note.
“If the bullish signal is confirmed, there is room for
further emerging market FX appreciation, with EM currencies set
to be the best asset in the period ahead, overtaking EM fixed
income in the process.”
Turkish stocks hit fresh 15-month highs on rate cut
expectations, and Polish stocks hit three-week highs,
though Russian stocks dipped from Friday’s four-month
highs.
In currency markets, the Czech crown hit its
highest in more than five months, but the shekel hit a
one-month low.
Concerns that a solution to the European debt crisis will
not be found, rising inflation expectations and an unclear
budget outlook led the Bank of Israel to leave short-term
interest rates unchanged last month, minutes of the discussions
showed on Monday.
(Reporting by Carolyn Cohn; Editing by Toby Chopra)
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