×

EMERGING MARKETS-Polish zloty rebounds off 3-mth low, EM stocks at 27-mth high

high@

LONDON, July 24 (Reuters) - The Polish zloty rebounded off three-month lows on Monday after the president said he would veto judiciary reforms, whilst emerging stocks rose to 27-month highs underpinned by a weak dollar and a benign growth outlook.

The zloty firmed 0.7 percent against the euro after Polish President Andrzej Duda said he would veto two of three bills to reform the judiciary system, which have triggered street protests and raised EU concerns about a politicisation of the courts.

"(The zloty) has reversed some of the losses seen late last week," said William Jackson, senior emerging markets economist at Capital Economics.

"Attention now will focus on these controversial laws going back to parliament, how they are redrafted and whether in their final form they will continue to cause alarm for investors and for the European Union."

The Polish currency had slumped to its lowest level since mid-April earlier in the day, having fallen over 1 percent on Friday.

The measures have attracted strong criticism from the European Union, which gave Poland a week to shelve the judicial reforms or risk sanctions.

Broader emerging markets have shrugged off the tensions, with MSCI's benchmark emerging equity index up 0.3 percent to its highest since April 2015.

Chinese mainland stocks rose 0.4 percent to near 18-month highs, Indian shares gained 0.5 percent to hit fresh record highs and South African stocks rose 0.8 percent.

The International Monetary Fund upgraded its growth forecast for China to 6.7 percent in 2017.

Emerging market assets have been supported by a run of robust data in recent weeks, whilst the U.S. dollar has slipped to its lowest since June 2016 against a basket of currencies allowing emerging currencies to make gains.

One outlier was the Russian rouble, which slipped 1 percent against the dollar after the U.S. Senate and House leaders agreed a bill allowing new sanctions. Russian dollar-denominated stocks also fell 1 percent.

The Turkish lira slipped a touch against the dollar as a diplomatic spat between Germany and Turkey rumbled on. Relations between the countries have deteriorated following the arrest of six human rights activists, including one German, two weeks ago.

Fitch maintained its junk rating on Turkey's sovereign debt on Friday, citing political and regional risks as well as the impact of economic stimulus that could weaken the countrys fiscal performance.

For GRAPHIC on emerging market FX performance 2017, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2017, see http://tmsnrt.rs/2dZbdP5

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see) Emerging Markets Prices from Reuters

Equities Latest Net Chg % Chg % Chg

on year

Morgan Stanley

Emrg Mkt Indx 1063.59 +3.41 +0.32 +23.35 Czech Rep 1002.50 -1.69 -0.17 +8.78 Poland 2344.00 +0.90 +0.04 +20.33 Hungary 35577.19 -56.72 -0.16 +11.17 Romania 8351.34 -23.37 -0.28 +17.87 Greece 848.70 +2.73 +0.32 +31.86 Russia 1015.09 -9.80 -0.96 -11.91 South Africa 48145.36 +343.45 +0.72 +9.67 Turkey 07313.65 +470.86 +0.44 +37.34 China 3250.49 +12.51 +0.39 +4.73 India 32225.99 +197.10 +0.62 +21.03 Currencies Latest Prev Local Local close currency currency

% change % change

in 2017

Czech Rep 26.03 26.03 +0.02 +3.76

Poland 4.24 4.27 +0.67 +3.90

Hungary 305.13 305.19 +0.02 +1.21

Romania 4.56 4.57 +0.19 -0.58

Serbia 120.13 120.14 +0.01 +2.68

Russia 59.76 59.31 -0.75 +2.52

Kazakhstan 327.11 325.06 -0.63 +2.00

Ukraine 25.81 25.87 +0.23 +4.61

South Africa 12.93 12.90 -0.22 +6.21

Kenya 103.75 103.70 -0.05 -1.33

Israel 3.58 3.57 -0.23 +7.67

Turkey 3.54 3.54 -0.11 -0.35

China 6.75 6.77 +0.23 +2.85

India 64.40 64.38 -0.03 +5.50

Brazil 3.14 3.14 +0.00 +3.55

Mexico 17.64 17.65 +0.10 +17.47

Debt Index Strip Spd Chg %Rtn Index

Sov'gn Debt EMBIG 324 0 .01 7 91.79 1

(Reporting by Claire Milhench; Editing by Alison Williams)