* Turkey raises interest rate by 200 bps * Lira set for best day since new cenbank chief appointment in Nov * MSCI EM stocks index up 0.6%; Fed vows to stay accommodative * Russian rouble gives up gains; extends sanctions threat dive * Brazil’s real jumps 1.7% after rate hike (Updates after Turkey’s central bank decision) March 18 (Reuters) - The Turkish lira looked set for its strongest session in four months on Thursday after the central bank delivered a bumper interest rate hike aimed at taming inflation, while emerging market stocks made handsome gains after the U.S. Federal Reserve kept its dovish stance. The lira was last at 7.345 to the dollar after the central bank raised its key interest rate by 200 basis points to 19%, topping a consensus estimate for a 100 bps increase. This takes rate hikes under central bank chief Naci Agbal, appointed in November, to 875 bps. “With the policy rate at 19%, the TRY is one of the most attractive high-yielding EM currencies, not only in nominal terms, but also its attractiveness in real terms should increase in the coming months when inflation starts falling,” said Piotr Matys, senior FX strategist for central and eastern Europe at Rabobank. The lira had gained around 20% since November as the central bank kept lifting interest rates. But the currency has given back some of those gains as surging inflation threatens to widen Turkey’s current account deficit, and there are also concerns about federal policy and pressure from rising U.S. Treasury yields. Overnight, Brazil’s central bank announced a larger-than-expected 75 basis point increase in its main interest rate to 2.75%, and flagged a similar move in May to fight inflation despite rising economic uncertainty. The real jumped 1.7% in the first few minutes of trading on Thursday. Meanwhile, MSCI’s index of EM stocks rose 0.6% with India sitting out a rally in most other main indexes from China to South Africa. Its currency counterpart rose as much as 0.4% before paring some gains as rising U.S. Treasury yields saw the dollar regain traction. The Fed on Wednesday gave a robust outlook for U.S. economic growth and said any pick-up in inflation should be temporary and does not warrant a move away from its accommodative stance. Ratings agency Fitch said it expects the Fed to start tapering early next year, which could impact emerging markets given the “outsized role” of the U.S. dollar in EM lending and global credit markets. Russia’s rouble gave up gains of as much as 0.5% to trade 0.2% lower, following a 1% slump on Wednesday triggered by fears of more severe sanctions after scathing rhetoric from U.S. President Joe Biden against Russian counterpart Vladimir Putin over 2020 U.S. elections. Eyes will be on the actual nature and extent of sanctions due as soon as next week, according to sources. South Africa’s rand fell 0.6% on Thursday, giving away its post-Fed gains. The Mexican peso also suffered a similar fate. For GRAPHIC on emerging market FX performance in 2021, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see tmsnrt.rs/2OusNdX For TOP NEWS across emerging markets For CENTRAL EUROPE market report, see For TURKISH market report, see For RUSSIAN market report, see