* Oil prices fall nearly 5%

* Frontier market bonds jump, Middle Eastern debt firms

* Taiwan's central bank seen holding rates steady through

2027

By Avinash P

June 15 (Reuters) - Emerging market assets rallied on Monday

as global risk appetite surged following a preliminary pact

between the U.S. and Iran to end their three-month conflict.

The agreement, confirmed by U.S. President Donald Trump on

Truth Social, will reopen the vital Strait of Hormuz, sending

oil prices down nearly 5% to three-month lows.

The reopening of the critical artery of energy supplies is

expected to ease the inflation fears that had recently forced

global central banks to tilt more hawkish.

"Financial markets have had opportunities to react to this kind

of deal on several occasions already," said analysts at ING.

"The bigger reaction could come at the short end of yield

curves, where central banks have had to clear up the

inflationary mess left by the energy spike in April and May."

MSCI's gauge tracking EM stocks gained 2.8%, while

the corresponding currencies index was up 0.3%.

Markets had rallied on Friday after signs of an imminent peace

deal were touted.

BOND MARKETS REBOUND

With inflation fears cooling, international bonds issued by

frontier markets rallied sharply, with many recovering to

pre-war levels.

Energy-dependent nations saw the largest gains. Sri Lanka's

2038 bond jumped over 2 cents to trade just above 99 cents on

the dollar, while Egypt's debt rose 1.8 cents. Kenya and

Pakistan both gained over a cent, while Middle Eastern debt also

ticked up.

In Asia, equity gains were led by heavyweights South Korea

and Taiwan, which advanced 5.2% and 2.8%,

respectively. Both bourses are among the best-performing markets

this year, boasting gains of more than 100% and 50% year to

date, respectively, fuelled by an eye-popping AI rally.

Taiwan's central bank is expected to hold its policy interest

rate steady this week and keep it in place into 2027, according

to economists polled by Reuters.

China's stock benchmarks rose 1.6% and 2.4%

respectively. Global ratings agency Fitch affirmed the nation's

'A' sovereign rating with a stable outlook.

The yuan touched its strongest level in over

three years. India's rupee appreciated 0.5%, while the

Indonesian rupiah and Sri Lankan rupee were up 1%

each.

South Africa's stocks jumped 3%, while the rand

strengthened 0.6%. Stronger gold prices also aided gains

as the country is among the major exporters of the yellow metal.

Turkey's benchmark advanced 2.7%. Industrial production

rose 3.7% month-on-month in April on a seasonally and

calendar-adjusted basis, official data showed.

Most emerging market currencies were flat to lower against

the euro. However, the Hungarian forint gained 0.6%

against the dollar taking its yearly gains to over 7.7% and

making it one of the best-performing currencies in 2026.

Stocks in Poland gained 0.8%, while Hungary

added 0.6%. Romanian stocks however, declined 0.6%.

HIGHLIGHTS:

** China bonds emerge as surprise haven as Iran war reshapes

portfolios

** EU envoys agree to first phase of membership talks for

Ukraine and Moldova

** What's happening with the contested ballots in Peru's

election?

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see