CORRECTED-EMERGING MARKETS-Stocks advance as China rally continues; focus on tariffs

By Shashwat Chauhan

March 6 (Reuters) - An index for emerging markets stocks jumped on Thursday, with Chinese shares rallying on hints from Beijing of new policy support, while U.S. President Donald Trump's decision to exempt some automakers from tariffs for a month provided some relief.

Hong Kong's Hang Seng .HSI touched its highest level since February 2022, while Chinese blue-chips .CSI300 closed 1.4% higher a day after Beijing unlocked more fiscal stimulus at the annual meeting of China's parliament, promising greater efforts to support consumption.

A stand-out was Hong Kong-listed shares of Alibaba Group 9988.HK, which jumped 8.4% following the release of a new reasoning model that the company said was on par with global hit DeepSeek's R1.

Globally, investors felt a degree of relief after the White House said on Wednesday Trump would exempt automakers from his punishing 25% tariffs on Canada and Mexico for one month as long as they comply with existing free trade rules.

"What is remarkable is not so much the postponement of the tariffs by a month – even if this did cause noticeable relief on the markets," Commerzbank economists said in a note.

"What is more important is that President Trump apparently intends to remain firm on the matter."

That spurred a rally on Wall Street overnight, with the S&P 500 .SPX closing more than 1% higher.

MSCI's index for EM equities .MSCIEF jumped 1.3%, with a 0.8% advance in beaten down Indian shares .NSEI also lending a hand.

Goldman Sachs raised its target price for emerging markets stocks, projecting that the AI-powered rally in Chinese equities could boost other markets as well.

The currencies index .MIEM00000CUS, meanwhile, edged 0.1% higher.

In emerging Europe, Hungary's forint EURHUF= led losses against the euro as markets turned their focus to a European Central Bank (ECB) interest rate decision at 1315 GMT, with consensus tilted towards another rate cut.

Turkey's lira TRYTOM=D3 was last trading at 36.45 per dollar ahead of a local rate decision, with the central bank widely expected to ease its main lending rate by 250 basis-points.

Equities in the region built on firm gains seen in the last session, with the Polish benchmark .WIG20 jumping 0.9% after a 3.7% rise on Wednesday.

Debt markets, meanwhile, showed a different picture with EM debt also caught in the maelstrom of the global bond selloff, as international bonds from Egypt to Romania and Nigeria were down around 0.5-0.7 cents.

German bonds were at the forefront of the selloff, with long-dated maturities seeing their biggest sell-off in decades as the parties in talks to form Germany's new government agreed to try to loosen fiscal rules.

HIGHLIGHTS:

** After Trump's tariffs, Mexico seeks Asian and European crude oil buyers

** Malaysia central bank keeps key rate at 3%, as expected

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For RUSSIAN market report, see RU/RUB