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MSCI EM stocks index up 0.3%, FX slips 0.2%

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China, Hong Kong stocks rise on Beijing support

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After long break, Indonesian markets feel whiplash of

tariffs

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GS says markets see higher probability of Ukrainian peace

deal

By Johann M Cherian

April 8 (Reuters) - Stocks across most major emerging

markets rose on Tuesday, rebounding after logging sharp declines

in recent sessions, although sentiment was still fragile and

investors searched for signs of respite in an ongoing global

trade war.

MSCI's index tracking equities in developing markets

edged up 0.3%, bouncing back after logging its biggest

one-day drop since the 2008 global financial crisis on Monday.

Indications that countries such as Japan, Vietnam and Israel

were looking to negotiate trade deals with the United States

further provided impetus for risk taking.

Israel's main stock index gained 1%, while indexes

in India added nearly 2%, and those in central

and eastern Europe added 1.8%. Turkish

stocks gained 0.7%. Vietnamese stocks, however, continued

their drop and were last down 6.4%.

Chinese stocks rose 1.7% as sovereign fund Central

Huijin Investment took steps to stabilise the capital market.

Hong Kong stocks climbed more than 1.5%, rebounding from

their steepest decline since the 1997 Asian financial crisis.

The yuan was flat.

However, market concerns about a possible global trade war

and the consequent economic fallout are still on investors'

minds.

A trade war between China and the U.S. appears on the verge

of further escalation, while the European Union is also

proposing a retaliation.

"The biggest next round of risk comes from Chinese currency

devaluation," said Charlie Robertson, head of macro strategy at

FIM Partners.

If China sees that retaliatory tariffs are insufficient, it

could resort to a currency devaluation to make its exports more

competitive in the global market, which will then spill over

into a more wider weakness in emerging markets, Robertson added.

Meanwhile, an 8% tumble in Indonesia's stock market

prompted a 30-minute trading halt, while the rupiah fell

to a record low as markets reopened after an extended holiday

break and reacted to the global market turmoil.

A broader currencies gauge dipped 0.2%

against the dollar, while currencies of top oil exporters such

as Russia, Nigeria and Algeria ticked

higher, tracking a rebound in crude prices.

Oil prices have been trading close to four-year lows of

about $60/barrel. There are concerns that a slump in demand for

the commodity during a global slowdown could hurt economies such

as Russia's that are dependent on oil rents.

The bounce back was also reflected on the fixed income

front, with Sri Lanka's and Mongolia's

hard-currency papers adding over 3 cents each

on the dollar.

Those of Kenya, Jordan and

Egypt gained over 1 cent each.

Markets are also watching for developments around a

potential end to the Russian-Ukraine conflict. Kyiv's

hard-currency bonds edged up

between 0.4-0.6 cents on the dollar.

Goldman Sachs said bond pricing inferred that markets

believed there was 70% probability of a Ukraine peace deal, up

sharply from before the November election of U.S. President

Donald Trump.