Stocks gain 3.2%, FX rises 0.8%
EM international bonds climb higher after prior session's losses
Hungarian inflation slows more than expected
Stock indexes in Greece, Hungary and S. Africa rise over 3%
S. Korea considers extra budget for low income earners affected by oil prices
By Twesha Dikshit
March 10 (Reuters) - Emerging market stocks and currencies rose on Tuesday after a heavy selloff in the previous session, lifted by U.S. President Donald Trump's assertion that the Middle East war could be "over soon", as well as lower oil prices.
Tensions remained, with Iran saying that it would decide when the war ends and its Revolutionary Guards adding they would not allow "one litre of oil" to be shipped from the Middle East if U.S. and Israeli attacks continued. Trump warned Tehran that any blocking of oil exports would lead to harder hits.
Even so, a potential end to a war that has led to surging oil prices, inflation worries and a market rout, had investors feeling more optimistic.
"US President Trump's comments that the operations in Iran were ahead of schedule, were 'very complete, pretty much', and he was considering taking over the Strait of Hormuz was enough of a headline to reverse price actions across the energy complex, equities, rates, credit and FX markets," said Tom Nelson, Franklin Templeton Investment Solutions' head of market strategy.
"The swift reaction was for equities, rates, and credit to rally while the US dollar and the commodity energy complex sold off."
The MSCI index tracking EM equities .MSCIEF advanced 3.2%, after losing 3% on Monday. A corresponding gauge of currencies .MIEM00000CUS rose 0.8%.
Across EMs, international bonds followed their developed market peers higher, clawing back some of Monday's hefty losses. Debt issued by some riskier frontier markets, such as Sri Lanka and Pakistan, led gains, with several maturities adding nearly 3 cents.
EQUITIES RISE ACROSS REGIONS
Most bourses in the Middle East gained, with stocks in Dubai .DFMGI and Qatar .QSI adding 3% and 1%, respectively. Saudi Arabia's blue-chip index .TASI edged up, hampered by a 1.6% drop in Saudi Aramco 2222.SE.
The oil major reported a 12% drop in annual profit and said there would be "catastrophic consequences" for oil markets if the war continues to disrupt shipping in the Strait of Hormuz.
Shares in emerging Europe advanced, with benchmark indexes in Hungary .BUX, Poland .WIG20, Czech Republic .PX and Romania .BETI rising between 2.1% and 3.1%.
The Hungarian forint EURHUF= was flat after hitting a seven-month low against the euro in the prior session. Data showed the country's headline inflation slowed to 1.4% in February, below analyst expectations of 1.7%.
Separately, Hungary's government banned the export of crude oil and some fuel products and said it would release 45 days' worth of state fuel reserves.
Other regional currencies were range-bound, with the Polish zloty EURPLN= ticking slightly lower.
South Africa's blue-chip index .JTOPI added 3.3% ahead of GDP figures later in the day. Iran-neighbour Turkey's shares .XU100 rose 2%. Equities in Greece .ATG gained 3.7%.
Asian markets regained some losses, with South Korea's benchmark index .KS11 climbing 5.4%. The government said it would consider drafting an extra budget with support measures for low-income earners hit harder by rising oil prices.
Equities in Taiwan .TWII, Philippines .PSI and Thailand .SETI were up around 2% each.
The Group of Seven nations said it was prepared to implement "necessary measures" in response to soaring oil prices but stopped short of committing to an energy release.
For TOP NEWS across emerging markets nTOPEMRG
For CENTRAL EUROPE market report, see CEE/
For TURKISH market report, see .IS
For RUSSIAN market report, see RU/RUB
(Reporting by Twesha Dikshit. Editing by Mark Potter)
((Twesha.Dikshit@thomsonreuters.com;))
