* Fed move cheers emerging stocks, bonds
* Russian shares jump 5 pct as oil price rise
* Russian rouble up beyond 39 vs basket
* Israel delays bond pricing
By Sebastian Tong
LONDON, March 19 (Reuters) - Emerging assets rallied on
Thursday, cheered by the U.S. Federal Reserve's surprise move to
start large-scale government bond-buying while a weaker
greenback saw Russia's rouble strengthening beyond 39 against
its euro-dollar basket.
The Fed's plan to inject an extra $1 trillion into the U.S.
economy extended an emerging-equities winning streak for the
eighth day, with the key MSCI Emerging Markets Index <.MSCIEF>
up more than 2 percent to 555.51 by 1120 GMT.
"It's definitely super-bullish for emerging markets in the
near term but whether this move turns things around dramatically
is still too early to tell," said Benoit Anne, foreign exchange
and debt strategist at Merrill Lynch.
"We will need to watch the G10 economies to see if there is
a shift of focus away from recession to inflation concerns. The
macroeconomic fundamentals in emerging economies still remain
poor. But this could be a significant bear rally that could
still benefit emerging markets," he added.
Shares hit one-month highs in Romania <>, the Czech
Republic <> and South Africa <.JTOPI>.
Russian assets got a further boost from oil <CLc1>, which
climbed above $50 a barrel. Shares <> leapt over 5 percent
with the dollar-denominated RTS index <> hitting its
highest in nearly three months.
Spurred on by oil and a weaker dollar, the rouble rose
nearly 1 percent to strengthen beyond 39 versus its euro-dollar
basket <RUS=MCX> for the first time since a central bank
official highlighted that level as a likely boundary for
near-term currency fluctuations a month ago. []
DOLLAR WEAKNESS
Emerging sovereign debt spreads <11EMJ> tightened much as 16
basis points over U.S. Treasuries, which saw their biggest
one-day tumble since 1987 following the announcement by the U.S.
central bank.
Israel said it would delay the pricing of its new 10-year
$1.5 billion bond until Thursday due to sharp movements in the
US Treasury market. []
The country's benchmark 10-year bond <ILGOI0219=TA> rallied
as much as 1.6 percent in price while the shekel rose 0.5
percent to a month-high against the dollar <ILS=>.
The Fed's plan to buy up to $300 billion in longer-term
Treasuries to bring down borrowing costs and jumpstart the
economy triggered the greenback's largest single day fall since
1985.
The dollar's weakness helped Kenya's shilling to rebound 0.5
percent from Wednesday's four-year low <KES=> while the Turkish
lira <TRY=> failed to gain much traction, staying to flat ahead
of the central bank's interest rate decision at 1700 GMT.
"There is scope for a 100 bps cut today but there is a risk
it will be smaller, or the rate may even be kept on hold. The
central bank could be tempted to pause ahead of local elections
and uncertainties surrounding the talks with the IMF," said
SocGen in a client note.
Hungary led a wider emerging European recovery in risk
premiums with five-year insurance against its sovereign debt
default quoted at 518 bps, down from 535 bps in the previous New
York close.
Five-year credit default swaps for Poland were quoted 9 bps
lower while those for Russia had eased 7 bps, according to CMA
DataVision.
Nonetheless, Moody's said on Thursday that the global crisis
was increasing the risk of sovereign debt defaults, noting that
Ecuador and the Seychelles have both missed interest payments on
their global bonds last year. []
The ratings agency also warned it could downgrade Kuwait's
sovereign rating over a political crisis that has led to the
dissolution of the country's parliament following the
resignation of the government. []
(Reporting by Sebastian Tong; Editing by Victoria Main)
