Source: www.forbes.com

LONDON, Oct 30 (Reuters) - Emerging equities soared by 9 percent, sovereign debt spreads snapped in and currencies rallied on Thursday as investors took heart from a U.S. rate cut and currency swap lines for emerging market economies.

The Federal Reserve delivered on Wednesday an expected 50 basis point rate cut and launched $120 billion in new currency swap lines with South Korea, Mexico, Brazil and Singapore.

China, Hong Kong, Norway and Taiwan have also cut rates and Japan, the euro zone and Britain are expected to follow soon.

In addition, the International Monetary Fund on Wednesday approved a short-term financing facility for emerging market economies that have a good track record but are having difficulties accessing credit.

Emerging market assets have been crushed in recent weeks by the ongoing global financial crisis, as hedge funds pulled out of riskier assets to cover redemption payments, and several emerging economies appeared on the verge of collapse.

Benchmark emerging equities rose over 9 percent and were trading at 554.37 at 1030 GMT, bringing their gains to 24 percent from four-year lows set on Tuesday. Stocks have still fallen 30 percent this month and 55 percent this year.

'We have had energetic action worldwide from central bank governors and international institutions,' said Elisabeth Gruie, emerging markets strategist at BNP Paribas (other-otc: BNPQY.PK - news - people ).

'There is a sense of a step up in the measures and the market is benefiting from this.'

Russia's MICEX exchange suspended trading for an hour after its index rose more than 14 percent.

Emerging sovereign debt spreads tightened by 50 basis points to 682 bps over U.S. Treasuries, after narrowing by 50 bps in the previous session. Spreads topped 900 bps, their widest levels in six years, less than a week ago.

Russia's five-year credit default swaps, which hit distressed levels above 1,000 bps last week, tightened by 100 bps from the close to 700-850 bps, traders said.

Turkey also tightened by 100 bps, to 500-600 bps.

CURRENCIES UP

Dollar weakness following the U.S. rate cut to 1.0 percent and hints of more to come led to demand for higher-yielding currencies.

The Turkish lira hit two-week highs against the dollar and was trading nearly 2 percent higher from the U.S. close, bringing gains to 17 percent from 27-month lows set last week. The rand also hit two-week highs.

Turkey's economy minister Mehmet Simsek said Turkey had a positive approach to an IMF precautionary deal and a programme could be agreed if differences could be overcome.

Investors are eyeing the next emerging economies to agree IMF help. Ukraine, Hungary and Iceland have already clinched deals, and Turkey, Pakistan, Serbia and Belarus are in talks.

Ukraine's hryvnia spiked up 14 percent against the dollar , recouping the previous day's losses to record lows, in volatile trade after the central bank this week removed the currency's trading band.

The Ukraine president's office said on Thursday the central bank had sold nearly $5 billion in three weeks and criticised its failure to stabilise the currency.

The Icelandic crown continued to show barely any trade in international markets. Only two euro/crown trades have been recorded on Reuters matching dealing system since the central bank raised rates by 6 percentage points on Tuesday, with both trades at 240 per euro.

(Editing by Mike Peacock) Keywords: MARKETS EMERGING

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