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EMERGING MARKETS-Stocks rise for fifth straight day; FX struggles

By Susan Mathew

Oct 6 (Reuters) - Emerging market shares extended gains to a fifth straight session on Thursday, while central and eastern European currencies eased amid central bank-related disappointments and energy concerns.

A wobbly dollar helped Asian shares gain, and optimism trickled outside the region too. Turkish, South African and Polish shares rose more than 1% each.

MSCI's index of emerging market shares added 0.3%, having risen more than 4% in a week. But the index is still down 26% for the year.

Emerging market stocks and currencies have slumped nearly 8% so far in 2022 as aggressive central bank tightening to tame surging inflation raised worries about a recession, spurring a flight to safe-haven U.S. dollar and lifting Treasury yields.

Arthur Budaghyan, chief EM strategist at BCA Research, who has been underweight EM over the last 12 years, holds a more positive view.

"We are in the very late stages of that underweight call," he said. "We will soon be moving into a regime where the EM versus developed markets relative stock price trajectory shifts from a bear market into a broad trading range."

But, the dollar attempted to regain momentum ahead of Friday's U.S. labour data, trimming gains on other currencies. .

Central bank intervention via U.S. dollar sales won't strengthen emerging market currencies, a Reuters poll showed, and nothing could be done to power emerging market currencies over the coming six months, some strategists said.

South Africa's rand tripped 0.3%, to extend losses to a second session after the central bank warned that power outages will shave about one percentage point from economic growth in Africa's most industrialized nation.

Turkey's lira, down 28% this year, rose 0.8%.

In central and eastern Europe, Hungary's forint dropped 0.5% to 423.16 against the euro after data showed retail sales slowed in August.

The currency has lost close to 13% this year amid energy supply worries due to the Russia-Ukraine war, and surging prices. While it should rebound from record lows hit in September on hopes for European Union funds, it is likely to struggle over the next year to break past the psychological 400 per euro level, a Reuters poll found.

The Polish zloty fell 0.5% on track for its biggest drop in a week, and extending losses after the central bank on Wednesday held the key interest rate steady against expectations of a 25 basis points hike, as it warned of an economic slowdown in the coming months. For GRAPHIC on emerging market FX performance in 2022, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2022, see https://tmsnrt.rs/2OusNdX

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For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Reporting by Susan Mathew in Bengaluru; editing by Uttaresh.V)