* Stocks at 4-1/2 month high, spreads tighten 4 bps
* Ukraine prices two-tranche bond, 3 times oversubscribed
* Rouble recovers from 7-month low
By Carolyn Cohn
LONDON, Sept 17 (Reuters) - Emerging equities rose 1 percent
to fresh 4-1/2 month highs and debt spreads tightened on Friday,
as investors took a positive view on the U.S. economy, and
Ukraine priced a $2 billion Eurobond which was three times
oversubscribed.
U.S. consumer sentiment due later on Friday is expected to
show a reading of 70.0 compared with 68.9 in the final August
report.
Investors are scaling back their expectations of a
double-dip recession, increasing their appetite for riskier
assets.
"The market has priced in the concerns about the global
growth slowdown and ... is looking beyond that," said Imran
Ahmad, emerging markets strategist at RBS.
"We have seen a decent move higher in euro/dollar and
overall the environment is favourable for emerging market
assets."
The MSCI emerging equities index <.MSCIEF> rose 1 percent to
its highest since late April, having gained 2.6 percent so far
this week. The Thomson Reuters emerging Europe index
<.TRXFLDEEPU> hit its highest since Jan 2008.
Emerging sovereign debt spreads <11EMJ> tightened by 4 basis
points to 269 bps over U.S. Treasuries.
Stable debt spreads and the end of the summer have
encouraged a flood of emerging market bonds, with more than $17
billion in issuance so far this month.
Poland launched a 1 billion euro 10-year bond this week,
Brazil issued a $550 million tap while Sri Lankan and Moroccan
officials are meeting investors to discuss planned bonds.
Ukraine priced a $2 billion bond at 541 basis points over
U.S. Treasuries for the 5-year tranche and 499 bps for the
10-year. Orders totalled over $6.2 billion, prime minister
Mykola Azarov said.
"The huge demand for today's two Ukrainian bond issues is a
very good message for emerging Europe as a whole, namely that
markets believe in the ongoing reform programs, supported by the
EU/IMF/EBRD," said Simon Quijano-Evans, EME economist at
Cheuvreux in Vienna, in a client note.
Ukraine's five-year credit default swaps fell to 539 bps
from 546.8, according to CMA.
The lira <TRY=> was steady after Turkey's central bank chief
said the bank wanted to speed up its foreign reserve accrual and
was closely monitoring developments in the lira, but that
intervention increased volatility.
Central banks around the world have shown concern about
currency strength, with Japan intervening to weaken the yen this
week.
Turkey's central bank kept its main policy rate steady on
Thursday but cut two other rates by 25 bps in a technical move.
The rouble recovered 1 percent after hitting 7-month lows
against its euro-dollar basket <RUS=MCX> on Thursday against a
backdrop of weaker oil prices.
The rand <ZAR=> rose 0.5 percent, with gold at record highs
and investors attracted by high bond yields.
(Additional reporting by Sujata Rao; Editing by Ruth
Pitchford)
