* Stocks at one-year highs; China data gives fresh impetus
* Polish zloty, bonds hit by fiscal woes
* Forint weighed down by zloty, rate cut expectation
By Sujata Rao
LONDON, Sept 11 (Reuters) - Emerging stocks hit fresh
one-year highs for the fourth day in a row on Friday with
buoyant Chinese economic data adding to optimism generated by
G20 governments' pledges to keep monetary policy accommodative.
The optimism did not touch central Europe, however, where
gloom over a swelling budget deficit hit the Polish zloty and
local bond markets.
The dollar sank to one-year lows <.DXY> as investors shifted
cash into riskier assets like equities and emerging markets, a
trend that may accelerate after the release of China's robust
retail, production and investment data for August.
Beijing said it was confident of 8 percent economic growth
this year, helping push world stocks to 11-month highs for the
fourth session running while emerging equities are already
trading at levels last seen before the Lehman Brothers collapse.
The MSCI emerging index <.MSCIEF> rose 0.4 percent and
looked set to end the week with gains of over 4 percent.
"All the drivers for emerging markets are there -- global
recovery seems to be going well, the news from Asia is very
strong and... people are convinced of very strong growth in
China," Marten-Jan Bakkum, investment strategist at ING Asset
Management in the Hague, said.
"And the liquidity theme that we had in 2004-2007 seems to
be coming back quickly, which is no surprise given the
aggressive monetary easing everywhere. That's a driver for risky
assets in general and EM in particular as growth is looking good
in Asia as well as the United States," he added.
With oil prices up for the fifth straight day, Russian
stocks firmed <>, trading just off the three month highs
touched on Thursday. Gold <XAU=> trading above $1000 an ounce
also helped South Africa's commodity-driven blue-chip index
rally 1.3 percent to a fresh 11-month high <.JTOPI>.
Turkish equities also rebounded over 1 percent <>.
HSBC said Chinese credit growth was still running at 34
percent year-on-year in August while July U.S. trade data showed
a 4.7 percent rise in imports on the year.
"All in all, encouraging signs that external factors are
looking supportive for emerging markets," HSBC said in a note.
CURRENCIES WEAK
Emerging currencies were untouched by the stock market
exuberance, with the Polish zloty slumping over one percent
against the euro <EURPLN=> while five-year Polish bond yields
rose to a three-month high <PL5YT=RR>.
Regional markets are feeling the heat from news that
Poland's budget in 2010 will run its biggest deficit in 20
years. Five-year yields have risen almost one percent this week
following a poor auction on Wednesday and the zloty has fallen 2
percent against the euro since Monday.
"(Financing the deficit) largely depends on the success of
privatisation plans. If these are not successful it will mean
higher bond supply in the long term so we prefer short-term
paper," Gyula Toth, a strategist at Unicredit in Vienna, said.
Zloty weakness was also weighing on the forint, he said,
while data showing August inflation at a better-than-expected 5
percent had fuelled expectations of a rate cut later this month.
The forint fell 0.6 percent to the euro <EURHUF=>.
The South African rand <ZAR=> also retreated from 13-month
highs, failing to capitalise on the weak dollar after the
International Monetary Fund suggested the currency was
overvalued []. Its comments came after the central
bank governor told Reuters that rand strength looked overdone.
Turkey's lira <TRY=> also gave up early gains chalked up on
news the country had run its first current account surplus in
five years as traders said uncertainty over an IMF standby loan
deal weighed on the market.
Benchmark bond yields were around 9.32 percent, just off
historic lows touched earlier in the week.
(Editing by Lin Noueihed)
