London - Emerging stocks were on track for their biggest weekly gains in six months on Friday, buoyed by Japan's surprise move to ramp up its stimulus programme and strong United States growth data.
The Russian rouble weakened ahead of a central bank meeting that could see either a significant rate rise or a move to a more freely floating currency.
MSCI's emerging equities index rose 0.8 percent on the day, bringing gains to 1.17 percent since the start of the year after Japan delivered a jolt to markets, admitting growth and inflation had not picked up as expected.
The MSCI Asia Pacific ex-Japan benchmark gained 0.9 percent on the day, driven by Chinese shares with the Shanghai composite chalking up the best weekly performance since February and India stocks powering to a record high on the second consecutive day.
“When we have one of the major central banks of the world implementing easing like that, it is helpful for risk sentiment in emerging markets,” said Danske Bank Analyst Lars Christensen.
The Bank of Japan's move had made up for the more hawkish tone from the Federal Reserve earlier in the week, he added.
“Overall we are through this uncertainty we have seen two weeks ago,” Christensen said.
The upbeat mood was supported by US GDP data on Thursday showing a surge in third quarter economic growth and Ukraine, Russia and the EU clinching a deal that will see Moscow resume vital gas deliveries to its neighbour in return for payments funded in part by Kiev's Western creditors.
In Russia, where investors nervously awaited the outcome of a central bank meeting, the dollar-based RTS index traded flat while the rouble-denominated MICEX index powered up 1.2 percent with both were on track for large weekly gains after ending the previous seven days in the red.
Following a roller-coaster ride on Thursday, which saw the rouble gain as much as 5 percent, the currency weakened 1.5 percent against the dollar in early trading.
Russia's central bank, which has burnt at least $25 billion (R276 billion) in reserves on heavy intervention this month, is expected to hike its key interest rate by 50 basis points to 8.5 percent, according to a Reuters poll.
Though markets are wary that the bank may have something else apart from an interest rate change in store, said RBS analyst Tatyana Orlova, referring to possible shifts in the foreign exchange parameters.
“The central bank has surprised the markets consistently since the start of the year,” Orlova said.
“The only thing that is guaranteed is extreme volatility.”
Mexico's central bank is also meeting on Friday.
Analysts forecast it to hold its benchmark interest rate steady amid expectations that a recent spike in inflation will fade next year. - Reuters