EMERGING MARKETS-Stocks at one-week high as Trump talks up China talks

Australian dollars in Sydney, Friday, Jan. 15, 2016. (AAP Image/Joel Carrett) NO ARCHIVING

* MSCI EM stocks index set to end three-week losing streak

* Chinese equities mark best week in 2 months

* EM currencies stronger against weak dollar

By Ambar Warrick

Dec 6 (Reuters) – Emerging-market stocks touched a one-week high on Friday, tracking global equities higher, as Sino-U.S. trade optimism grew after encouraging comments from U.S. President Donald Trump.

With less than 10 days left before additional U.S. tariffs are imposed on Chinese goods, markets are still hoping for a phase-one trade deal.

Trump on Thursday said trade talks are “moving right along,” even as Beijing maintained its stance that some existing tariffs must come off as part of an interim agreement.

“Although progress towards an interim agreement has taken on a Brexit-like tortuousness, at least both sides appear to be still talking,” Jeffrey Halley, a senior market analyst at OANDA, wrote in a note. “Trade headlines will continue to flip-flop sentiment in an already-volatile cocktail next week.” MSCI’s index of developing-world equities rose on Friday. It was set to gain for the week, ending three straight weeks of declines.

Hopes for recovery in emerging markets has also driven some risk-on buying, with investors expecting to reap the benefits of lower global interest rates going into the next year.

Chinese stocks ended higher for the day and posted their best weekly gain in nearly two months. South African equities rose as much as 1.1%.

Russian shares gained, led by oil and gas stocks. Gazprom PAO and Novatek PAO rose on stronger oil prices after OPEC agreed to cut output by almost 50% in early 2020.

Emerging-market currencies continued to benefit from a weaker dollar, with MSCI’s developing world currencies index set to gain for the week.

The dollar was pressured through the week by weak economic readings. It was lower on Friday before U.S. payrolls data expected later in the day.

China’s yuan rose nearly 0.2% to the dollar, and was set to end two straight weeks of declines. Most other emerging Asia currencies also strengthened slightly.

The South African rand edged up. The Hungarian forint and the Polish zloty slipped lower against the euro.

For GRAPHIC on emerging market FX performance 2019, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance 2019, see tmsnrt.rs/2OusNdX

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For RUSSIAN market report, see (Reporting by Ambar Warrick in Bengaluru)

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