* Stocks set for best day in over two months * Hungarian forint surges on positive GDP, hawkish signals * Russian stocks rally, rouble flat May 18 (Reuters) - Emerging market stocks and currencies rose on Tuesday after comments from the Federal Reserve downplayed the possibility of early policy tightening, while a jump in commodity prices saw the South African rand leading gains. MSCI’s index of EM stocks surged 1.5% and was set for its best day in more than two weeks as bourses in Asia bounced back from recent losses. The index of EM currencies rose 0.3% after Dallas Federal Reserve President Robert Kaplan reiterated his view that he does not expect interest rates to rise until next year, prompting a drop in the dollar and Treasury yields, while benefiting risk-driven assets. “High inflation or inflation expectations and an unchanged Fed approach are an unfavourable constellation for USD,” You-Na Park-Heger, FX and EM analyst at Commerzbank wrote in a note. “An increasing number of central banks seem to be waking up from their pandemic paralysis and are reacting to the improving economic situation and rising inflation.” Gains in gold, oil and base metal prices pushed the South African rand up 0.6%, the most across currencies in Europe, the Middle East, and Africa (EMEA). The currency is among the best performing EM units this year because of its relatively high yield. Hungary’s forint rose 0.3% to a near nine-month high against the euro, extending steep gains from Monday after the country’s central bank flagged a possible rate hike in June to tame inflation. Data also showed Hungary’s economy shrank less than expected in the first quarter. Hawkish signals from Hungary, following nearly a year of loose monetary policy, pushed up inflation expectations around the globe, with several EM banks beginning to either commence tightening, or signalling that they will. The prospect of tightening, coupled with a largely benign Fed, has seen EM bond spreads stabilise back to near pre-pandemic levels, pointing to a stronger outlook for EM debt. Russia’s rouble was flat, as gains in oil prices were offset by preliminary data that showed gross domestic product fell 1% in the first quarter. But Russian stocks rallied 1.3% to near record highs, propped up by strong first-quarter results from Gazprom Neft, the oil arm of Russian gas giant Gazprom . Both stocks rose about 1%. 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 Reporting by Ambar Warrick in Bengaluru; editing by Barbara Lewis Our Standards: The Thomson Reuters Trust Principles.