LONDON, May 2 (Reuters) - Turkish stocks and bonds hit
record highs on Thursday, outgunning otherwise lacklustre
emerging markets where weak Chinese manufacturing data and an
upcoming European Central Bank meeting kept a lid on activity.
Chinese markets, opening after a holiday, slipped to
four-month lows following data showing a fall in
purchasing managers' indices in April
confirming the slowdown in the world's second-biggest economy.
That kept MSCI's emerging equity benchmark flat,
just off six-week highs after the index closed April with a
small gain following two lossmaking quarters.
India and Turkey, big beneficiaries of weaker commodity
prices, jumped 1-2 percent . Both countries'
central banks are expected to cut rates.
Turkish stocks rose 1.8 percent while bond yields
fell more than 10 basis points after data this week
showed a shrinking trade gap.
"The decline in oil prices is very positive for the balance
of payments and the inflation outlook, and with lira still seen
as strong, the likelihood of a cut is high," said Murat Toprak,
emerging markets strategist at HSBC.
"Second, the market expects an upgrade relatively soon from
Moody's, all its recent statements support that view."
Turkey needs a second agency to rate it investment grade,
allowing for inclusion in many more investment portfolios.
Russia's dollar-denominated index fell 1.3 percent as weak
PMIs in key oil import markets weighed on crude prices.
Weak PMIs hit currencies as Czech and Polish output shrank
for the 13th straight month, Hungary's PMI slowed and German
production fell for the second month in a row.
Polish short-end bond yields fell to new record lows as
markets priced in more rate cuts.
The Romanian central bank left interest rates unchanged, and
the Czech central bank was expected to follow suit, but Prague
markets will listen for hints on whether policymakers are still
thinking about weakening the crown. The crown was flat
but the leu weakened 0.4 percent against the euro.
Weak metals prices pushed the rand 0.6 percent lower versus
the dollar, bringing year-to-date losses to over 6 percent.
Markets could get some impetus however if the ECB fulfils
expectations for a quarter point rate cut later in the day.
(Reporting by Sujata Rao; Editing by Hugh Lawson)
