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Emerging stocks climb as global rally eases

Emerging market stocks headed for the best week in eight months even as the global equities rally spurred by the Federal Reserve’s outlook lost momentum. The dollar edged higher, but was poised for its biggest weekly loss since February.

Developing nation shares rose a sixth day, while both European stocks and futures for the S&P 500 Index were little changed.

Oil prices were poised for their first weekly gain this month after Saudi Arabia’s Energy Minister told Bloomberg News the kingdom may prolong production cuts.

A gauge of Group-of-10 nation carry returns headed for the best weekly advance since January.

While momentum faded on Friday, global stocks are on course for the best week since January after the Fed raised its benchmark lending rate a quarter point without accelerating the timetable for future hikes.

US policy makers’ reticence to speed up tightening is prompting investors to ditch the dollar in favour of higher-yielding currencies, while the most tranquil markets in two years are spurring a hunt for returns in riskier landscapes.

"A less hawkish monetary policy in the US is more likely to push assets outside of the US into higher-risk, higher-return markets," James Woods, a Sydney-based investment analyst at Rivkin Securities, said in a phone interview.

"A weaker dollar is supportive of those emerging markets.

Volatility is extending its retreat after a series of central bank policy decisions passed without incident and the Dutch election results eased concern about the rise of European populism.

JPMorgan Chase’s G7 Volatility Index fell 7.5% on Thursday to the lowest since November 2014.

One-month implied volatility for the Euro Stoxx 50 Index has dropped this week and trades near its lowest level since July of the same year.

What investors will be watching:

The focus Friday will be a meeting between Donald Trump and Angela Merkel, while Steve Mnuchin attends his first G-20 finance chiefs gathering in Germany as US Treasury secretary.

Rex Tillerson continues his first trip through Asia as US Secretary of State, stopping in South Korea before heading to Beijing.

Economic data on Friday include US industrial production for February, while Tiffany & Co. is among companies scheduled to release earnings.

Here are the main moves in markets:

Stocks

The Stoxx Europe 600 Index was little changed as of 8:04 in New York. The MSCI Emerging Markets Index rose 0.3%, bringing its rally for the week to 4.4%, outpacing a 1.3% advance for the MSCI All-Country World Index.

Currencies

The dollar added less than 0.1%. The euro was the worst major performer against the greenback, falling 0.3% to $1.0731.

Commodities

West Texas Intermediate gained 0.4% to $48.94 a barrel and Brent traded up 0.4 percent to $51.93. Gold was poised for its first weekly advance this month.

Bullion for immediate delivery added 0.3% to $1 230.52 an ounce, on track for a weekly gain of 2.2%.  

Bonds

The yield on 10-year US Treasuries fell three basis points to 2.52%. French yields for bonds of the same duration climbed two basis points to 1.1%, while German bunds were little changed.

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