* Turk yields near record low on rate hopes, IMF comments
* Emerging stocks at new one-yr high; currencies firmer
* Rouble at 2009 high against weak dollar
By Sujata Rao
LONDON, Sept 17 (Reuters) - Turkish bond yields traded near
all-time lows on Thursday and stocks rose 0.5 percent on
expectations of a further cut in interest rates, while the
broader emerging equity index hit a new one-year peak.
Turkish markets also cheered the International Monetary
Fund's (IMF) support for a medium-term economic plan released on
Wednesday even though the plan estimated the country's budget
deficit would soar.
The fund said it was "encouraged" by the plan though it
called for more policies to tackle spending pressures.
The central bank is expected to cut borrowing costs by 50
basis points later in the day to a record low of 7.25 percent, a
Reuters poll showed [], driving the benchmark 2010
bond yield down to 9.08 percent late on Wednesday.
The yield rose slightly on Thursday to around 9.12 percent
while the lira <TRY=> was flat versus the dollar near a six-week
high. The Istanbul stock market rose 0.6 percent <>.
"The key event of the day will be the CBRT meeting, data
releases since the last meeting have been on the downside which
means we may see another dovish statement, which would support
the bond market further," said Elisabeth Gruie, emerging markets
strategist at BNP Paribas in London.
"The fact that we have at long last a programme is positive
and we concur with the IMF, though going forward there will be
the small question of implementation."
Emerging stocks surged 0.6 percent to a new one-year high
<.MSCIEF>, continuing the momentum from earlier this week when
markets greeted positive economic data from the United States
and policymaker comments suggesting the recession may be ending.
Regional markets rose across the board, with Johannesburg
<.JTOPI> up one percent as gold stayed at 18-month highs and
other precious metals rallied in its wake. Another gainer was
Hungary which rallied 0.8 percent to a new one-year high <>.
CURRENCIES UP, CAUTION URGED
Currencies firmed, with the Czech crown outperforming the
rest of central Europe by rising half a percent to a nine-month
high against the euro <EURCZK=>. The postponement of a snap
election was seen as positive for the budget. []
The rouble firmed 0.73 percent to its euro-dollar basket as
oil prices rose back above $72 a barrel <RUS=MCX> And with the
dollar near a one-year low, the Russian currency strengthened to
its highest since January against the greenback <RUB=>.
The exception was the South African rand which fell back 0.9
percent off 13-month highs hit earlier <ZAR=>. Dealers said the
currency had merely come up against resistance around 7.30 per
dollar and predicted firming to continue.
"It's all about the dollar which has been getting crushed
and the commodities. We have seen big commodity trading accounts
selling dollar-rand," one currency trader said. "The (central
bank) can't do much about it, the trend is for a stronger rand."
The rand has now gained 29 percent to the dollar this year
on par with the Brazilian real's rise against the greenback.
Many investors believe the rally in emerging assets could
have now gone too far. Gruie of BNP Paribas said valuations were
overstretched, given most countries are still in recession.
Others were more pessimistic.
Marcus Allenspach, head of bond research at Julius Baer,
highlighted the reception for Turkey's economic plan as an
example of bull markets' tendency to look on the bright side.
"(The rally) is overdone. Everyone is extrapolating the
demand push from China and seeing a V-shaped recovery in the
United States but there are issues no one is talking of,"
Allenspach said.
"Will the U.S. consumer start spending again or will he try
to restore his balance sheet? That question is still
unanswered...so the higher the market goes, the more cautious
you must be."
(Reporting by Sujata Rao; editing by Patrick Graham)
