* Stocks rise for the fifth day; at new 4-1/2 mth high
* South African rand, bonds at new 2-1/2 yr highs
* Emerging borrowers returning; $186 bln issued YTD
By Sujata Rao
LONDON, Sept 15 (Reuters) - Emerging stocks eked out gains for fourth day on Wednesday, while South Africa's rand surged to new 2-1/2 year highs thanks to foreign cash flows into bond markets.
Central European stocks were down 0.5-0.7 percent <.MIEE00000PUS> <.TRXFLDEEPU>, hurt by concerns that Germany's recovery could be running out of steam after a closely-watched survey on Tuesday showed sentiment failing.
The emerging sector overall, though, was benefiting from strength in China and some recent upbeat data suggesting the U.S. economic picture may be less dire than feared.
Trade in the higher-risk markets was relatively quiet amid the buzz surrounding Japan's first currency intervention in six years and MSCI emerging stocks <.MSCIEF> firmed very slightly to a new 4-1/2 month high.
The index has risen 7 percent this month. In Asia, Indian stocks <.BSESN> surged to fresh 32-month highs, led by export-reliant tech firms that were boosted by positive U.S. retail sales data. Korean markets <.KS11> were up 0.5 percent.
"We have had a pickup in risk appetite which benefits emerging markets and we also had good news within emerging markets such as the Turkish referendum results," said Arvid Bohm, emerging equities strategist at SEB in Stockholm.
He was referring to a weekend vote on constitutional reform that showed strong support for the ruling AKP party. That, along with data showing double-digit annual growth, has pushed Turkish stocks <.XU100> to record highs though they eased a touch on Wednesday.
Bohm says he is considering moving Turkey to overweight, on par with his recommendation on India, Korea, Poland and Brazil. But he notes EM stocks have tracked rather than significantly outperformed developed markets in this latest uptick.
"We can't lean back and expect a one-way street moving higher. The bargain hunting that was possible a couple of months back is not there any more," he said, noting the market trades at a 7 percent discount to developed stocks on a 12-month forward earnings basis, down from 15 percent at the end of May.
RAND AT NEW 2-1/2 YEAR HIGH
On currencies, the rand extended gains, rising to a fresh 2-1/2 year high versus the dollar
The rand is up almost 5 percent this year and has risen almost 4 percent this month.
Other emerging currencies were marginally weaker, including the Czech crown which had shot to a 22-month high to the euro on Tuesday
The crown as well as the rand have benefited from foreign interest in local bonds -- Czech yields have fallen to historic lows in recent months.
South Africa's benchmark 2015 yields
"The market has taken the view of additional easing from the central bank. That's given some impetus to bonds," said Standard Chartered analyst Razia Khan.
Investors are waiting to hear what is said about the rand at next week's meeting of the ruling ANC party but Khan, like most analysts, says it will be hard to tame the currency.
"The overall driver is the flows into EM -- to the extent that risk appetite remains in place there is nothing to rule out more rand strength," she added.
JP Morgan recommended long positions in South Africa's
15-year
On hard currency bond markets, JP Morgan sovereign energing bond indices <11EMJ> <11EML> were around 7 bps tighter and year-to-date returns are 12 percent.
Fresh supply has started to hit markets and Brazil on Tuesday sold $500 million in a tap of its 2041 issue.
Ukraine looks set to tap the eurobond market in coming day, possibly with a $2 billion 10-year issue that was postponed from July while Sri Lanka is meeting bond investors. A raft of corporates are also marketing deals.
JP Morgan estimated year-to-date sovereign supply at $61 billion, or 80 of its full-year estimate. In total it said sovereigns and corporates have borrowed $186 billion this year out of a forecast $256 billion.
(Editing by Patrick Graham)