*

Hong Kong central bank cuts interest rate, tracks Fed move

*

China expected to trim main policy rate and lending

benchmarks

*

Gulf central banks cut key interest rates

*

Pakistan benchmark share index hits all-time high

*

Brazil central bank raises rates by 25 bps

By Ankika Biswas

Sept 19 (Reuters) - An index for emerging market stocks

jumped 1% and the currencies index hit a record high on

Thursday, as a larger-than-usual overnight U.S. interest rate

cut saw investors piling into risk assets, while Brazil

delivered its first rate hike in two years.

The U.S. dollar edged lower after the Federal Reserve on

Wednesday delivered a half-percentage-point reduction in its

benchmark interest rate, which gives EM central banks more scope

to ease further to support domestic growth.

The MSCI index for EM stocks climbed 1%, after

snapping a four-day winning streak in the previous session,

while the currencies index defended its

record-high level.

Chinese stocks rose on hopes that the start of the U.S.

easing cycle will give Beijing policymakers more room to

stimulate the ailing Chinese economy. The blue-chip CSI300

and Shanghai Composite indexes rose to near

two-week highs.

A Reuters poll showed China is widely expected to trim its

main policy and benchmark lending rates on Friday, while Hong

Kong cut its base rate charged via the overnight discount window

by 50 basis points. Hong Kong's monetary policy moves in

lock-step with the U.S. as its currency is pegged to

the greenback in a tight range of 7.75-7.85 per dollar.

Most Gulf central banks also cut their key rates, tracking

the Fed's move, which along with strong oil prices boosted their

stock markets.

Saudi Arabia cut its repurchase agreement rate and reverse

repo rate by 50 bps each and the United Arab Emirates reduced

its base rate on the overnight deposit facility by half a

percentage point.

"The (Fed's) 'dot plot' indicates a long-term level of 3% is

being targeted, whereas the latter will be data dependent," said

Enrique Diaz-Alvarez, chief economist at global financial

services firm Ebury.

"This move opens the way to a generally weaker dollar and

offers welcome relief in particular to emerging market

currencies that have struggled so far this year."

However, the big question remains - whether the Fed has

kicked off its rate-cutting cycle in time to keep the world's

largest economy from slowing too rapidly.

Pakistan's benchmark share index hit a record high,

climbing nearly 2%, on expectations of further substantive

monetary easing to spur economic growth.

The Bank of England, South Africa and Turkey's interest rate

verdicts are all scheduled for Thursday. While South Africa is

widely expected to cut rates for the first time in over four

years, Turkey is seen holding rates steady.

The rand gained 0.6% against the dollar, and the

benchmark stocks index jumped 1% to an over two-week

high.

Elsewhere, Brazil kicked off a rate-hiking cycle on

Wednesday with a 25 basis-point increase, as expected, and

signalled more increases ahead.