Emerging stocks poised for best monthly rally since October 2013

Emerging-market stocks headed for the highest level since November as a cease-fire took hold in Ukraine and as speculation grew China will step up economic stimulus. The rouble was poised for the best month on record.

Bank Saint-Petersburg OJSC jumped 6.9 per cent in Moscow, leading lenders higher. The dollar-denominated RTS Index climbed 3.9 per cent for the biggest gain in the world. Cnooc and PetroChina Co advanced at least two per cent in Hong Kong. The Russian currency strengthened 1.7 per cent against the dollar, extending its February increase to 14 per cent.

"The equity rally is not over," Martial Godet, the head of emerging-market equity and derivatives strategy at BNP Paribas SA in Paris, said. "We see five per cent upside for the MSCI Emerging Markets Index before December, and more in local currencies. There is still some appetite for the rouble, which means investors are confident that the truce is globally respected in Ukraine and the oil price outlook stable."

The MSCI Emerging Markets Index rose 0.3 per cent to 996.19 at 11:17 am in London, taking its rally this month to 3.6 per cent, the most since October 2013. Signs of stability in oil prices and progress in talks between Russia and European leaders to resolve the Ukraine crisis have helped the measure add 4.2 per cent this year, pushing its valuation to the most expensive since April 2010.

Cease-fire breaches have halted, Ukraine's military said Thursday, even as Russian Foreign Minister Sergei Lavrov said the truce is producing tangible results. That marks the biggest progress since February 12 when leaders of Ukraine, Russia, Germany and France agreed on the deal. Since then, pro-Russian insurgents have seized a key transport hub, while the US and the Europe Union threatened more sanctions against Russia.

Chinese stocks rose to a four-week high on speculation the government will do more to cushion the economic slowdown. Premier Li Keqiang called for more active fiscal policy, while a central-bank publication said additional monetary easing is needed. The National People's Congress convenes its annual meeting in the first two weeks of March, when the government sets its growth target for the year.