* Rouble gains 1.8% on Tuesday

* MSCI EM stocks eye best day in two weeks

* Polish zloty supported by strong data, rate hike hopes

By Ambar Warrick

April 14 (Reuters) – Russia’s rouble extended strong gains on Wednesday on hopes of improving ties between Moscow and the West, while other emerging market currencies rose as U.S. inflation data failed to stoke fears of imminent policy tightening.

The rouble led gains across currencies in Europe, the Middle East and Africa, having surged 1.8% on Tuesday after a phone call between U.S. President Joe Biden and Russian President Vladimir Putin, which the Kremlin said was a proposal to normalise ties.

This comes in the wake of simmering tensions over eastern Ukraine, which had pushed the rouble to five month lows recently.

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“It would be premature to claim that risk perceptions ought to subside… while the Biden administration was always viewed as potentially more hawkish towards Russia than its predecessor, the timeframe has been shortened,” analysts at Commerzbank said.

“Had things not escalated around Ukraine, Biden’s Russia policy might have taken longer to be fleshed out. Now the prospect of concrete action has, indeed, drawn nearer.”

The MSCI’s index of emerging market currencies rose 0.3%, with the dollar hitting three week lows after an uptick in U.S. inflation did not spark wider fears about accelerating inflation and the Federal Reserve’s tapering, pushing down U.S. bond yields.

Higher U.S. yields had weighed on emerging market currencies and debt this year, as investors bet on a swift U.S. economic recovery prompting rate hikes by the Fed.

But even as fears of a hawkish Fed appear to be dissipating, sentiment towards emerging market assets remained constrained by a damaging second wave of COVID-19 cases.

In EMEA, gains in Turkey’s lira were hampered by a fresh round of virus-related curbs. Anticipation of an interest rate decision on Thursday also held back the currency.

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The Polish zloty outpaced its regional peers after the country marked a robust current account surplus in Feb. A central bank rate-setter also said the bank should consider a rate hike, with inflation set to rise above the bank’s target range.

Emerging market stocks marked strong gains on Wednesday, with MSCI’s index of equities set for its best day in two weeks. Asian markets also gained for the day.

For GRAPHIC on emerging market FX performance in 2021, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see https://tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

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For RUSSIAN market report, see (Reporting by Ambar Warrick in Bengaluru, Editing by William Maclean)

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