* China auto sales surge in July, log fourth straight monthly gain
* Turkey c.bank cuts liquidity limit to primary dealers to zero
* South African rand flat ahead of June manufacturing figures
By Shreyashi Sanyal
Aug 11 (Reuters) - Emerging market stocks rose on Tuesday on fresh signs of momentum behind China’s economic recovery, while the Turkish lira found some respite after the central bank’s latest step to raise borrowing costs via backdoor channels.
Stocks in Asia led early gains after a report showed China’s auto sales in July climbed 16.4% from a year earlier, the fourth straight monthly rise as the world’s biggest vehicle market recovers from a low point hit during the country’s coronavirus lockdown.
MSCI’s index for developing world equities was 0.4% higher, with bourses in Europe also firming in early trade.
Investors clung to hopes of more coronavirus aid in the United States as congressional leaders and Trump administration officials said on Monday they were ready to resume negotiations after talks collapsed on Friday.
“As such, markets are assuming that an agreement is likely to be reached, it’s just a question of when and not if, and it is on this assumption that we see markets edging higher,” said Michael Hewson, chief market analyst at CMC Markets.
Analysts have forecast a recovery in emerging markets during the second half of the year, but surging COVID-19 cases and worsening Sino-U.S. ties have made investors more cautious.
Turkey’s lira broke a four-day losing streak to strengthen 0.5% against the dollar after the central bank said the limit on liquidity offered to primary dealers under open market operations will be reduced to zero as of Wednesday.
The lira had sagged to new record lows against the greenback last week. Turkish President Tayyip Erdogan said on Monday he hoped market interest rates will fall further to facilitate investment in the country.
South Africa’s rand was flat in early trade as investors returned from a national holiday that kept liquidity low. June manufacturing data is due at 1100 GMT and will give some idea of the pace of the economic recovery since the easing of lockdown restrictions.
The Russian rouble firmed with rising oil prices and on waning pressure from dividend season, while shrugging off political risks stemming from neighbouring Belarus.
Belarusian dollar-denominated government bonds fell again on Tuesday, as further unrest left at least one person dead after the opposition accused President Alexander Lukashenko of rigging his re-election victory.
(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Kirsten Donovan)