EMERGING MARKETS-India tax break, China rate cut lift stocks; FX rises

Agamoni Ghosh

* Indian stocks up more than 5% on big corporate tax cut

* China cuts new benchmark rate for a second month

* Rouble eyes third week of gains tracking higher oil prices

Sept 20 (Reuters) - A surge in Indian shares led emerging markets higher on Friday, after the government announced deep cuts in corporate taxes to revive flagging growth, while a widely expected domestic interest rate cut from China added to the chipper mood.

Indian shares surged 5% and were set for their best day in over a decade after Finance Minister Nirmala Sitharaman said the effective corporate tax rate would be lowered to about 25% from 30% and scrapped the minimum alternative tax for domestic companies.

The move is aimed at reviving private investment, which may help lift growth for Asia's third-largest economy from a six-year low that has caused job losses and fuelled discontent.

"It is an additional measure after the bank mergers and the capital infusion but potential growth is still on a downward trajectory," said Hugo Erken, head of international economics at Rabobank.

Growth "will struggle to push that 7% threshold unless a large scale stimulus package comes by," he said.

That surge helped MSCI's index for emerging market stocks rise 0.5%, with the rupee also the star performer among emerging currencies, strengthening 0.6%.

Adding to stimulus hopes was a cut in China's key domestic lending rate for the second month in a row, aimed at lower borrowing costs for companies and consumers in the slowing economy.

China's two main share indexes moved 0.3% higher but ended the week lower as Beijing's stance on overall monetary easing was seen as cautious with policymakers remaining reluctant to join a global stimulus wave.

Indices outside Asia were mixed with Moscow stocks shedding 0.4% but those in Johannesburg and Istanbul moving 0.3% higher.

Most developing world currencies marched higher against as feeble dollar with South Africa's rand up 0.4%, recovering ground it lost in the previous session after the central bank left its main interest rate on hold at 6.5%.

Russia's rouble strengthened 0.3%, on course to deliver a third week of gains as oil prices headed for their biggest weekly gain in months.

For GRAPHIC on emerging market FX performance 2019, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance 2019, see https://tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Editing by Richard Borsuk)