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EMERGING MARKETS-Risk appetite lifts stocks, FX; S.Africa enjoys moment in the sun

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LONDON, Feb 16 (Reuters) - Rekindled risk appetite helped emerging equities and currencies to strong weekly gains, with South African markets taking the limelight after Cyril Ramaphosa was sworn in as president of Africa's most industrialised economy.

Following two weeks of hefty losses, MSCI's emerging markets index was on track for a near 6 percent rise since Monday - the benchmark's best week in nearly two years.

The gains reflected a move higher across major bourses, with global equity indexes shrugging off the latest sign of increasing U.S. inflation this week and Treasury yields edging towards multi-year highs.

In late January, it was faster U.S. inflation that spooked bond markets and sparked a broad sell-off around the globe.

"The U.S. inflation print did not derail the sentiment in core markets and - even though yields marched higher - equities were able to shrug off those pressures...and this risk appetite definitely helped lift EM assets," said Inan Demir, senior emerging economist at Nomura International.

"Looking at the very short-term, that sentiment may remain in place, but at some point we will have to reconcile the rise in bond yields, the rise in inflation, perhaps a repricing of the Fed rate hike path with the current strength of risk appetite," he added.

The dollar continued its slide and was set for its worst week in two years against a basket of currencies, setting the stage for emerging currencies to chalk up gains over the week.

Russia's rouble firmed 3.6 percent over the week against the greenback, finding support from oil prices and healthy economic data. Turkey's lira advanced nearly 2 percent over the same time.

But it was South African markets that stole the show after Ramaphosa was sworn in as president, bringing to an end Jacob Zuma's nine-year tenure, which had been blighted by corruption scandals, stagnant economic growth and policy uncertainty.

The rand took another leg higher, strengthening 0.3 percent to trade at its firmest level in three years, and on track for a near 4 percent gain over the week.

The currency has firmed nearly 7 percent since the start of the year against the dollar - topping the list of best performing currencies around the globe.

As investors prepared to hear Ramaphosa's plans on tackling corruption and boosting growth in his first state of the nation address due later in the day, local 10-year benchmark yields edged closer to 8 percent.

These levels were last seen 2-1/2 years ago, weeks before the firing of respected finance minister Pravin Gordhan, which pummeled investor confidence.

Johannesburg's main stock index has gained more than 6 percent since Monday and is on track for its best week in nearly a decade.

Given the favourable backdrop in emerging markets in general, South Africa is well placed to enjoy its moment in the sun, said Nomura's Demir.

"(Ramaphosa) will enjoy the benefit of the doubt for quite some time, and markets will tend to look at the South African developments in a more positive light," he said. "But at some point delivery rather than promises will be important."

For GRAPHIC on emerging market FX performance 2018, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2018, see http://tmsnrt.rs/2dZbdP5

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(Reporting by Karin Strohecker, additional reporting by Claire Milhench; Editing by Gareth Jones)