EMERGING MARKETS-Russian debt gains on rate cut signals, other markets weaken

Fri Apr 21, 2017 9:08am GMT

By Sujata Rao

LONDON, April 21 (Reuters) - Russian 10-year bond yields fell to three-year lows on Friday on expectations of a rate cut, although the rouble along with most other emerging assets was flat to weaker as the dollar and U.S. yields held off recent lows.

The first round of French presidential elections this weekend has fuelled market jitters, even though far-right, anti-euro candidate Marine Le Pen is seen as unlikely to win the second and final round in May.

A rally in emerging markets has also been checked by tensions around Syria and North Korea, as well as worries over the policies of U.S. President Donald Trump, who has launched a probe against China and other steel exporters.

MSCI's emerging equity index rose 0.3 percent, but data from JPMorgan showed slowing inflows into emerging market funds, with equity and bond funds receiving $650 million and $1.3 billion respectively in the past week.

Chinese mainland shares posted their worst week of 2017 on fears of greater regulator scrutiny. Asian steelmakers' shares, however, shrugged off Trump's trade threats.

Most emerging currencies were flat to weaker against the dollar, but looked poised to end the week stronger.

South Africa's rand was set for its second week of gains after sharp falls in the two preceding weeks following a credit rating downgrade to junk. South African local yields touched a three-week low after data showed slowing inflation .

Turkey's lira firmed more than two percent this week after President Tayyip Erdogan won last weekend's referendum on awarding him greater powers.   Continued...

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UK £ USD =1.2952
Euro USD =1.1395
Rand USD =0.0775