By Claire Milhench
LONDON, March 3 (Reuters) - Emerging stocks rose for the fifth day in a row on Thursday, their longest winning streak so far this year, and were on track for their biggest weekly gain since October 2015, while South African shares leapt to three-month highs.
MSCI's emerging equity index rose almost 1 percent, up more than 4 percent so far this week, tracking a rally on Western bourses. The rally has followed a cut in reserve requirements for Chinese banks earlier in the week and heartening U.S. economic data especially on job creation .
Spreads on the JP Morgan EMBIG sovereign emerging dollar bonds index narrowed two basis points (bps) to 462 bps, the lowest since early January.
"(The rise) could also be a reaction to the January selloff - it may have been a bit overdone. It was all very doom and gloom at the time, but emerging markets aren't falling off a cliff," said William Jackson, senior EM economist at Capital Economics, noting also the recovery in commodity prices.
The stronger metals prices boosted South African stocks 1.5 percent This is well short of the $3.9 billion fine, indicating the company has hopes of a settlement with Nigerian regulators. Shares in miner Lonmin jumped 17 percent after the company said it had trimmed its workforce by over 5000, while Standard Bank rose 6 percent after it reported a 27 percent profit jump. The rand however weakened 0.8 percent. Russian stocks rose one percent and 10-year rouble bond yields fell to the lowest since August 2015 at 9.38 percent, a day after a bond auction was three times over-subscribed. "The stabilisation in oil prices looks like it is driving some non-resident flows. At an average $30 oil price for 2016, the government has been looking for a 5 percent/GDP or so budget deficit, so anything higher than $30 starts to look supportive," Commerzbank analysts wrote. Central European assets continued to bask in the glow of strong business activity data, as well as the prospect of more easing from the European Central Bank. Budapest was one of the strongest performers in the region, up 0.8 percent to the highest since mid-January, whilst the forint firmed 0.5 percent against the euro. The Polish zloty hovered near nine-week highs. Asian assets earlier put in a strong performance, with Indian stocks, up 1.5 percent, shrugging off data showing that growth in India's services industry slowed sharply in February. Markets are pricing in another rate cut in response to the budget. For GRAPHIC on emerging market FX performance 2016, see http://link.reuters.com/jus35t For GRAPHIC on MSCI emerging index performance 2016, see http://link.reuters.com/weh36s For GRAPHIC on MSCI emerging Europe performance 2016, see http://link.reuters.com/jun28s For GRAPHIC on MSCI frontier index performance 2016, see http://link.reuters.com/zyh97s For CENTRAL EUROPE market report, see For TURKISH market report, see For RUSSIAN market report, see ) (Editing by Richard Balmforth)