By Karin Strohecker LONDON, Aug 8 (Reuters) - Emerging stocks rose to one-year highs on Monday and currencies strengthened as momentum from Friday's better-than-expected U.S. jobs data helped investors to shrug off weak Chinese trade numbers. MSCI's emerging index jumped 1 percent, with stocks across Asia as well as in Turkey, Russia and South Africa chalking up solid gains after the U.S. employment reading beat expectations for the second straight month, bolstering expectations of faster economic growth. Prospects for a rate hike from the U.S. Federal Reserve, were tempered by Fed board member Jerome Powell, who warned of prolonged slow growth that could require lower rates for longer . That added up to a positive backdrop for emerging markets, said UBS strategist Manik Narain. "That underscores that this might be a positive environment for EM where the global economy is holding up, led by the U.S., but at the same time, rates are not an immediate threat for emerging markets," said Narain. He warned a significant slowdown from China could change that dynamic. Data from Beijing showed China's exports and imports fell more sharply than expected in July, though mainland Chinese equities shrugged off the numbers, jumping 1 percent. "Most of the miss in the Chinese data was coming from prices rather than volumes. Last week, Chinese PMIs indicated that broadly the economy is in a holding pattern right now. It's not going through a significant slowdown," said Narain. On currency markets, Turkey's lira gained 0.3 percent after ratings agency Moody's said a review on the sovereign remained ongoing, while July's failed coup was likely to exacerbate existing challenges. Markets had feared Moody's might cut Ankara's sovereign rating to junk, which would force some investors to reduce holdings of Turkish assets. Turkey's economy meanwhile showed clear signs of slowing, with industrial production rising 1.1 percent year-on-year. "Today's figures add to the evidence that the economy had slowed significantly even before July's attempted coup," Capital Economics told clients. Russia's rouble strengthened 0.7 percent thanks to oil prices rising more than 1 percent to the highest in 12 days. South Africa's rand rose 0.3 percent to nine-month highs, boosted by the global backdrop as well as last week's election which saw the ruling ANC party suffer its worst result since taking power in 1994. Currencies across central and eastern Europe fared less well, with Poland's zloty and Hungary's forint both weakening 0.2 percent against the euro ahead of economic data due this week. Second-quarter economic output figures in the region are expected to show faster growth than in Western Europe. In Romania, central bank governor Mugur Isarescu slashed his inflation forecast for end-2016 to -0.4 percent from 0.6 percent previously. Subdued inflation has allowed the region's policymakers to keep monetary policy loose. The Czech and the Romanian central banks held policy unchanged last week. Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg on year Morgan Stanley Emrg Mkt Indx 894.46 +8.94 +1.01 +12.63 Czech Rep 861.15 +11.36 +1.34 -9.95 Poland 1830.25 +4.80 +0.26 -1.55 Hungary 27373.58 +62.13 +0.23 +14.43 Romania 6798.94 +46.93 +0.70 -2.93 Greece 563.65 +0.89 +0.16 -10.72 Russia 945.80 +10.34 +1.11 +24.93 South Africa 45498.46 +112.72 +0.25 -0.65 Turkey 77241.80 +1176.10 +1.55 +7.69 China 3004.72 +28.02 +0.94 -15.10 India 28166.96 +88.61 +0.32 +7.85 Currencies Latest Prev Local Local close currency currency % change % change in 2016 Czech Rep 27.02 27.02 +0.01 -0.08 Poland 4.29 4.28 -0.24 -0.69 Hungary 310.70 310.17 -0.17 +1.27 Romania 4.46 4.45 -0.07 +1.38 Serbia 123.14 123.17 +0.02 -1.36 Russia 64.96 65.45 +0.75 +12.30 Kazakhstan 347.90 347.67 -0.07 -2.13 Ukraine 24.82 24.81 -0.04 -3.50 South Africa 13.65 13.72 +0.52 +13.30 Kenya 101.35 101.30 -0.05 +0.84 Israel 3.83 3.83 +0.01 +1.44 Turkey 2.99 3.00 +0.40 -2.31 China 6.66 6.65 -0.12 -2.54 India 66.79 66.83 +0.07 -0.88 Brazil 3.16 3.16 +0.10 +25.25 Mexico 18.65 18.75 +0.57 -7.91 Debt Index Strip Spd Chg %Rtn Index Sov'gn Debt EMBIG 375 0 .02 7 58.97 1 All data taken from Reuters. Currency percent change calculated from the daily U.S. close at 2130 GMT. For GRAPHIC on emerging market FX performance 2016, see http://link.reuters.com/jus35t For GRAPHIC on MSCI emerging index performance 2016, see http://link.reuters.com/weh36s For GRAPHIC on MSCI emerging Europe performance 2016, see http://link.reuters.com/jun28s For GRAPHIC on MSCI frontier index performance 2016, see http://link.reuters.com/zyh97s For CENTRAL EUROPE market report, see For TURKISH market report, see For RUSSIAN market report, see ) (Additional reporting by Claire Milhench; editing by John Stonestreet)
Reuters