EMERGING MARKETS-Rouble hits 5-month high on Ukraine, Turkish stocks rise
By Carolyn Cohn LONDON, June 24 (Reuters) - Russian stocks and the rouble hit five-month highs on Tuesday after pro-Russian separatist leaders in Ukraine's east agreed to a ceasefire, while Turkish stocks hit a 12-day high ahead of an expected rate cut. Separatist leaders in two areas have agreed to observe a ceasefire with Ukrainian forces until June 27, one of them said on Monday. The conflict in Ukraine has undermined Russian assets in recent weeks. "It's a significant relief," said Ulrich Leuchtmann, head of global FX research at Commerzbank in Frankfurt, of the ceasefire. But Ukrainian government forces accused the separatists of firing on several Ukrainian military checkpoints on Monday night. The MSCI emerging equities index rose 0.5 percent. Russian stocks rose more than 1 percent and the rouble rallied 0.3 percent. Ukraine's five-year credit default swaps fell 46 basis points to 792 bps, according to Markit. Turkish stocks hit 12-day highs and the lira a five-day high, supported by expectations of continued loose euro zone monetary policy ahead of an expected domestic rate cut. Turkey's central bank is expected to cut its one-week repo rate by 50 basis points at 1100 GMT. Investors see easy monetary conditions in the euro zone boosting higher-yielding emerging markets after recent weak data, including figures on Tuesday showing German Ifo business morale was hit this month by conflict in Ukraine and Iraq. "We are in a low volatility risk-seeking environment," said Leuchtmann. Bulgaria's CDS rose 7 bps to their highest since Nov 2013 at 123 bps after Russian bank VTB said it had no plan to provide liquidity or capital to Bulgaria's Corporate Commercial Bank (Corpbank), which was taken over by the Bulgarian central bank on Friday after a run on deposits. Bulgarian officials meet investors in London on Tuesday for an international bond roadshow. The zloty edged up after the head of Poland's central bank said he would not resign over a scandal over leaked recordings. The shekel hit its highest in nearly three years after Israel's central bank left rates unchanged on Monday. The rand hit month highs, adding to gains in the previous session after the country's longest strike ended. The Ugandan shilling hit its lowest levels since May 2013 as the central bank said it was in the market to support it. Traders said the shilling was being undermined by last week's U.S. sanctions against Uganda over widely condemned anti-gay laws, and by expectations of further monetary policy easing this month. Dubai's benchmark stock index fell 6.2 percent, heading for its biggest daily loss since last August, with construction firm Arabtec hitting its daily 10 percent limit down for the third day in a row. For GRAPHIC on emerging market FX performance 2014, see link.reuters.com/jus35t For GRAPHIC on MSCI emerging index performance 2014, see link.reuters.com/weh36s For GRAPHIC on MSCI emerging Europe performance 2014, see link.reuters.com/jun28s For GRAPHIC on MSCI frontier index performance 2014, see link.reuters.com/zyh97s For CENTRAL EUROPE market report, see For TURKISH market report, see For RUSSIAN market report, see ) (Editing by John Stonestreet)
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