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EMERGING MARKETS-Emerging stocks, FX sail higher as dollar licks Fed wounds

LONDON, Aug 17 (Reuters) - Emerging stocks sailed higher for a second day and many currencies firmed on Thursday after diminishing U.S. interest rate prospects and political upheaval in Washington hurt the dollar while choppy commodity prices cast a shadow over some markets.

MSCI's emerging market stocks gained 0.5 percent to hit a one-week high. In Asia, heavyweights South Korea and Taiwan as well as Chinese mainland stocks rose around half a percent.

Manila's bourse advanced 0.3 percent after second quarter data from the Philippines showed the economy grew by a faster-than-expected 6.5 percent thanks to a strong industrial sector and construction boom.

Bourses in South Africa, Turkey and Russia

as well as emerging Europe all

added between 0.3-0.5 percent.

The gains came after the dollar hit a soft patch on Wednesday when minutes from the last U.S. Federal Reserve meeting showed a lengthy discussion about recent soft inflation readings, with some calling for a halt to rate hikes until it was clear the trend was transitory.

Adding to the pressure on the dollar was Trump's disbanding of two high-profile business advisory councils after eight executives quit in protest over his remarks about the weekend violence in Virginia, casting further doubt over how much he may be able to deliver for corporate America.

"Upcoming Fed balance sheet reduction concerns seem to have moved backstage for emerging markets overnight, given the Federal Reserve Open Market Committee minutes' doubts about future inflation, just making Fed guidance that much more difficult to read," said Simon Quijano-Evans, a strategist at Legal & General Investment Management.

Some currencies strengthened against the tepid dollar.

China's yuan chalked up some of the biggest gains, firming 0.3 percent and snapping a four-day losing streak.

Oil prices edged back above the $50 per barrel threshold following their 1 percent tumble on Wednesday, providing some support to Russia's rouble which firmed 0.2 percent.

But South Africa's rand was treading water, shedding initial gains as copper futures dipped into the red, retreating from the 32-month peak hit earlier in the day.

Meanwhile policymakers at Egypt's central bank are seen leaving key interest rates unchanged this month after hiking them unexpectedly by 200 basis points for the second time in a row in July to rein in roaring inflation.

Inflation had soared to 35 percent in July on the back of energy subsidy cuts agreed with the International Monetary Fund as a condition of its $12 billion three-year loan.

Egypt has lifted key interest rates by 7 percentage points since it floated the pound in November as part of a $12 billion International Monetary Fund programme aimed at boosting the economy.

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 1065.06 +4.79 +0.45 +23.52 Czech Rep 1037.83 +4.00 +0.39 +12.61 Poland 2358.04 -23.14 -0.97 +21.05 Hungary 37113.98 +221.89 +0.60 +15.97 Romania 8348.10 +55.90 +0.67 +17.83 Greece 841.39 -1.02 -0.12 +30.72 Russia 1034.10 +4.34 +0.42 -10.26 South Africa 49323.10 +111.34 +0.23 +12.35 Turkey 06959.21 +97.21 +0.09 +36.88 China 3268.62 +22.17 +0.68 +5.32 India 31870.47 +99.58 +0.31 +19.69 Currencies Latest Prev Local Local close currency currency

% change % change

in 2017

Czech Rep 26.04 26.06 +0.08 +3.71

Poland 4.25 4.27 +0.28 +3.53

Hungary 304.06 304.24 +0.06 +1.57

Romania 4.58 4.58 +0.04 -1.00

Serbia 119.25 119.25 +0.00 +3.44

Russia 59.21 59.38 +0.29 +3.47

Kazakhstan 332.60 332.97 +0.11 +0.32

Ukraine 25.50 25.56 +0.24 +5.90

South Africa 13.16 13.16 +0.01 +4.31

Kenya 103.50 103.50 +0.00 -1.09

Israel 3.62 3.62 -0.14 +6.30

Turkey 3.52 3.51 -0.17 +0.22

China 6.67 6.69 +0.27 +4.06

India 64.17 64.17 +0.00 +5.89

Brazil 3.15 3.15 -0.03 +3.18

Mexico 17.68 17.66 -0.14 +17.16

Debt Index Strip Spd Chg %Rtn Index

Sov'gn Debt EMBIG 323 -2 .06 7 95.10 1

All data taken from Reuters at 08:37 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT.

(Reporting by Karin Strohecker; Editing by Toby Chopra)