Published: 10:27 GMT, 12 March 2015 | Updated: 10:27 GMT, 12 March 2015

By Sujata Rao

LONDON, March 12 (Reuters) — Emerging market stocks rebounded from two-month lows and currencies rose as the dollar gave up some of its recent gains.

Ukraine’s credit default swaps fell 184 basis points after the International Monetary Fund approved a $17.5 billion loan package for the country, a decision that was widely expected.

MSCI’s emerging equity index ended nine days of losses to rise half a percent, as the dollar slipped off 11 1/2- year highs against a basket of currencies. China, the biggest component of the stocks index, saw its mainland markets close almost 2 percent higher, led by bank stocks.

The dollar’s retreat offered some relief to emerging market currencies, after weakening them enough to force many central banks to defend them. After hitting record lows earlier in the week, the Turkish lira rose 1 percent to a one-week high. The rand firmed 1 percent, moving off 13-year lows.

Asian currencies also strengthened against the dollar. The Korean won rose off 20-month lows after the central bank cut interest rates but signalled it was done with easing.

There is a bit of respite, but this is not the turnaround, it’s a technical squeeze, said Benoit Anne, head of emerging markets strategy at Societe Generale. We are cautious from a global emerging markets perspective and short-term bearish tactically.

Risk reversals — a gauge of demand for options betting on a currency’s rising or falling — show a growing bias for dollar strength. One-month risk reversals on the rand and lira slipped on Thursday but stand just off 18-month highs.

The rouble rose 1 percent against the dollar, boosted also by rising oil prices, although expectations of a rate cut on Friday are likely to cap gains. Government bonds have risen steadily, with 10-year yields now at one-week lows below 13 percent.

The rouble is less correlated than its peers to the global backdrop, and that’s the reason there’s been a bit of outperformance, Anne said, though he stressed he would not advise jumping into Russian assets.

Ukraine’s debt insurance costs fell after the IMF approved a loan and said it could disburse $10 billion this year.

But Ukraine’s sovereign bonds fell by around a cent across the board, amid expectations the government will start debt- restructuring talks on Friday.

The Serbian dinar was flat before a central bank meeting that is expected to deliver a rate cut

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For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see ) (Editing by Larry King)