Markets rally on EM central banks" moves Wednesday 08:45 GMT. Equities are rallying and bonds are under pressure after developing-economy central banks - led by Turkey - weighed in to protect their currencies. The dollar is firmer and Treasury yields are rising as investors bet that the US Federal Reserve will announce a further tapering of its stimulus programme. Tokyo led the gainers in Asia, with the Nikkei 225 surging 2.7 per cent as strengthening risk appetite is expressed in a declining yen, the Japanese unit losing 0.2 per cent to Y103.20 versus the greenback. In Europe, the FTSE Eurofirst 300 is enjoying a gain of 0.9 per cent as US index futures show Wall Street's S&P 500 jumping 10 points to 1,803. The better mood is mainly the result of a rebound in many of the emerging market currencies that had taken such a battering at the end of last week and the beginning of this - financial stress that investors feared could crimp global growth by hurting business and investor sentiment. EM policy makers have rammed home to traders that they would not stand by and watch the market have its way. Russia's central bank has been intervening to support the rouble, while its Indian peer unexpectedly raised interest rates on Tuesday to underpin the rupee and tackle inflation. But the most robust response has come from Turkey's central bank, which overnight tightened policy by much more than analysts had expected, doubling the weekly repo rate from 4.5 per cent to 10 per cent and increasing the top rate from 7.75 per cent to 12 per cent. The Turkish lira, which on Monday hit a record low versus the US dollar of TL2.3900, is now changing hands at TL2.1890, a 2.7 per cent gain for Wednesday's session alone. Analysts said such decisive moves by the central banks would bolster sentiment towards emerging markets for now, but that problems remained. "Long USD/EM positions are likely to come under pressure in the near term, especially in Asia," said Siddharth Mathur, a Citigroup analyst based in Singapore. However, this is unlikely to change the medium-term outlook for EM currencies by very much. Large external deficits will remain difficult to finance in an environment of rising global cost of capital as developed markets recover. Indeed, there is an irony attached to the easing of EM currency fears. The calmer markets will be seen by some as making it even more likely that Federal Reserve will on Wednesday announce the trimming of another $10bn from its $75bn a month quantitative easing programme. The proposed reduction in stimulus has been presented as an important factor in why EM assets have been weaker, because less Fed largesse should push up US interest rates and make it harder for developing economies to attract funds. The more upbeat mood and expected Fed tapering is forcing Treasury prices lower, nudging yields up 4 basis points to 2.78 per cent. Equivalent maturity Bunds are adding 2bp to 1.70 per cent. The dollar index is up 0.1 per cent. Sentiment has also received a boost from data showing South Korean industrial production rose at its fastest pace since June 2009 in December, up 3.4 per cent from a month earlier. Seoul's Kospi equity index advanced by 1.3 per cent and the Won is up 0.9 per cent to Won1,069.8 to the dollar, continuing to recover from a four-month low hit on Monday. "Today's strong IP print provides further evidence that Korea remains on track for a gradual export-led recovery," wrote economists at HSBC. In commodities, Brent crude is up 8 cents to $107.49 a barrel and copper is adding 0.4 per cent to $7,175 a tonne. Gold is down $3 to $1,253 an ounce.