EMERGING MARKETS-Emerging stocks near two-year high after French vote

By Claire Milhench

LONDON, April 25 (Reuters) - Emerging market equities rose towards their highest in nearly two years on Tuesday, as relief over the results of Sunday's election in France boosted appetite for riskier assets and U.S. President Donald Trump's tax reform promises leant support.

MSCI (Frankfurt: 3HM.F - news) 's benchmark emerging equities index has rallied hard since market favourite Emmanuel Macron went safely through the first round of voting in France to face far-right leader Marine Le Pen (Other OTC: PENC - news) in a May 7 run-off for the presidency.

Emerging market stocks rose almost 1 percent, extending similar gains from the previous session to touch their highest level since June 2015.

"We have at least a week of upside to look forward to because we have just seen an easing of European political risk," said Koon Chow, emerging markets macro and FX strategist at UBP (Taiwan OTC: 6471.TWO - news) . "Europe is important for EM because it is a place where it sells its goods to and also where it gets a lot of investment from."

Asian manufacturing markets set the trend with index heavyweights such as Hong Kong and Taiwan (Taiwan OTC: 6549.TWO - news) up 1.2 percent. Korean stocks gained over 1 percent to touch a near six-year high, and the Korean won rose 0.7 percent.

Trump has called for new UN sanctions against North Korea , which has conducted a big live-fire exercise to mark the foundation of its military.

Parts of emerging Europe also continued to perform well as the risk of an anti-European Union French president receded. Poland, one of the biggest net receivers of EU funds, rose 0.5 percent to the highest since July 2015.

The Polish zloty gained 0.2 percent against the euro after touching two-week highs on Monday.

Trump's promise to offer a "big tax reform and tax reduction" plan on Wednesday also lifted investor sentiment. So did his indication that he is willing to delay pushing for funds to build a border wall with Mexico .

Chow said that the risk of U.S. protectionism and other forces of political friction had eased, helping some emerging market currencies appreciate against the dollar.

The yield premium paid by emerging market sovereign bonds over U.S. Treasuries on the JPMorgan EMBI Global Diversified narrowed 1 basis point to 306 basis points (bps), the lowest level since April 7. It has narrowed 14 bps since April 18.

Currencies retreated a touch after pushing to multi-week highs on Monday.

The South African rand slipped 0.5 percent against the dollar, after rising to a three-week high in the previous session. The central bank's leading business cycle indicator was up 1.1 percent month-on-month in February.

The Turkish lira also slipped 0.5 percent from a two-month high on Monday. Turkey's central bank governor said it would maintain its tight monetary policy stance, before its rate-setting meeting on Wednesday.

The Hungarian forint weakened 0.2 percent against the euro . Hungary's central bank meets later on Tuesday, and is expected to keep rates on hold and maintain a loose monetary policy. For GRAPHIC on emerging market FX performance 2017, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2017, see http://tmsnrt.rs/2dZbdP5

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see)

Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg

on year

Morgan Stanley (Xetra: 885836 - news) Emrg Mkt Indx 979.86 +8.50 +0.88 +13.64

Czech Rep 993.65 +1.13 +0.11 +7.82

Poland 2310.62 +13.72 +0.60 +18.62

Hungary 33113.11 -113.35 -0.34 +3.47

Romania 8273.99 -22.76 -0.27 +16.78

Greece 687.26 +3.96 +0.58 +6.78

Russia 1114.33 -2.25 -0.20 -3.30

South Africa 46346.58 +158.65 +0.34 +5.57

Turkey 93715.39 -87.42 -0.09 +19.93

China 3135.40 +5.87 +0.19 +1.02

India 29845.35 +189.51 +0.64 +12.09

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2017

Czech Rep 26.80 26.82 +0.04 +0.76

Poland 4.24 4.24 +0.17 +3.97

Hungary 311.67 311.19 -0.15 -0.91

Romania 4.52 4.53 +0.10 +0.27

Serbia 123.28 123.27 -0.01 +0.06

Russia 55.92 55.75 -0.30 +9.56

Kazakhstan 312.06 311.66 -0.13 +6.92

Ukraine 26.62 26.62 +0.00 +1.43

South Africa 13.07 13.00 -0.50 +5.10

Kenya 103.15 103.18 +0.03 -0.76

Israel 3.65 3.65 -0.04 +5.54

Turkey 3.59 3.57 -0.41 -1.64

China 6.89 6.88 -0.02 +0.83

India 64.24 64.49 +0.38 +5.76

Brazil 3.13 3.13 -0.04 +4.00

Mexico 18.77 18.73 -0.21 +10.35

Debt Index Strip Spd Chg %Rtn Index

Sov'gn Debt EMBIG 324 -2 .02 7 78.83 1

(Additional reporting by Marc Jones, editing by Larry King)