LONDON: A commodities rally helped lift emerging market stocks to a three-week peak on Thursday after Saudi Arabia was reported to be seeking oil prices as high as $100 a barrel, but Turkey's lira slipped after stellar gains in the previous session.
MSCI's benchmark emerging equities index rose 0.8 percent, extending gains into a third day, led by resources firms after the broad Commodity Research Bureau (CRB) index of commodity prices touched its highest level since July 2015.
Wednesday's 1.8 percent rise was the biggest one-day jump in the CRB in eight months. Aluminium prices are up 30 percent so far in April and nickel has jumped 20 percent this week alone.
However, some of those gains in aluminium prices were due to a supply squeeze after US sanctions on major Russian producer Rusal, with similar worries also spurring nickel.
Oil prices rose 1.2 percent to over $74 a barrel, highs not seen since late 2014, after a report that top crude exporter Saudi Arabia was seeking a price rise to as high as $100 a barrel, suggesting no change in a supply-cutting deal.
The Saudi bourse jumped 1.4 percent to its highest since August 2015, while Qatar rose 1.05 percent to 2-1/2 month highs. Other commodity producers also benefited, with South Africa shares up 0.4 percent to near one-month highs and Russian stocks up 0.3 percent to 10-day highs.
Earlier in Asia, Chinese mainland and Hong Kong stocks gained around 1.2 percent, boosted by gains in materials and energy firms. Beijing said it was well prepared to handle any negative effects from a trade dispute with the United States
Currencies delivered a more mixed performance, with the Kazakhstan tenge firming 0.8 percent, but the Russian rouble weakened 0.3 percent.
Ratings agency Moody's said Russia's strong public and external finances would shield its economy from the impact of the latest US sanctions. But it also warned the sanctions would be credit-negative for some Russian debt issuers, especially Rusal.
Turkey's lira was among the worst performers, slipping 0.8 percent after gaining 2.1 percent in the previous session, its biggest one-day gain in more than a year. The surge came after President Tayyip Erdogan announced early elections for June 24.
Longer-dated Turkish sovereign dollar bonds extended Wednesday's gains with the January 2041 issue trading at around a one-month high according to Tradeweb. Turkish five-year credit default swaps held at 195 basis points, according to IHS Markit, a near two-week low.
"The authorities want to see the lira stable ahead of that election and a pre-requisite for that is tighter monetary settings," said Kiran Kowshik, a strategist at UniCredit. "The market is pricing that in. If they did a 100 basis points hike or above that, it would be short-term positive for the lira."
He said the rally might go on for a few weeks yet, with the lira potentially breaking through the 4 per dollar mark in the next few days. But to get through the key level of 3.94-3.95, the central bank would need to deliver, he added.
The Mexican peso also slipped 0.6 percent, with leftist Andres Manuel Lopez Obrador widening his lead in the race for the July 1 presidential election, opening up a gap of 22 percentage points, according to a poll.
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