By Ankika Biswas

Sept 25 (Reuters) -Chinese stocks continued to ride the stimulus momentum on Wednesday, as hopes of economic rebound sent the main stock indexes to over two-month highs, while Sri Lanka's president dissolving parliament saw its dollar bonds regain lost ground.

Chinese shares .CSI300, .SSEC climbed over 1% and Hong Kong's stocks .HSI hit a four-month high, gaining for a second day on the back of Beijing's wide-ranging stimulus package that boosted commodity prices and emerging market assets on Tuesday.

The offshore yuan CNH=D3 retouched a 16-month high during the day, briefly trading below the key 7-per-dollar level for the first time since May 2023.

"Against the prospect of more Fed cuts amid China's policy support for its economy and markets, CNY has scope to play catch-up to the recovery in Asian currencies," DBS strategists noted, referring in part to the prospect of more U.S. rate cuts.

While the stimulus measures have raised expectations that Beijing will follow soon with a fiscal package to complement the monetary and financial moves, analysts have raised doubts about their efficacy given weak consumer demand.

The MSCI EM stocks index .MSCIEF has been on a run, on track for a five-day winning streak, with China's stimulus cheer adding to the optimism sparked by the U.S. Federal Reserve's rate cut last week. The currencies index .MIEM00000CUS also rose 0.2% to scale a fresh all-time high.

On the political front, Sri Lanka's newly elected President Anura Kumara Dissanayake dissolved parliament to clear the way for a snap general election and is set to give a speech at 1400 GMT. Dissanayake on Tuesday named college professor and first-time lawmaker Harini Amarasuriya as prime minister.

Sri Lanka's sovereign dollar bonds, such as the 2025 maturity one USY8137FAE89=TE, gained around 2 cents, Tradeweb data showed.

The country's benchmark stock index .CSE jumped 2.4% to hit a near two-month high, on track for its first seven-day winning streak since April.

South Africa's main stock index .JTOPI hit a record high, climbing 1.4%, with investors returning after Tuesday's market holiday, while the rand ZAR=D3 firmed 0.2% against the dollar and defended its 20-month high.

Investors will also be on the lookout for the Czech Republic's monetary policy decision due during the day, with a 25 basis points rate cut expected. That would come on the heels of Hungary's similar-sized rate reduction the day before.

While the Czech crown EURCZK= was largely flat against the euro, the Hungarian forint EURHUF= slipped 0.2%.

Ghana's monetary policy meeting also starts during the day.

HIGHLIGHTS:

** Dissanayake's push for Sri Lanka economic change leaves IMF deal, debt rework in limbo

** China bond market opening offers no panacea to debt-laden African states

** Colombia legislative committees reject 2025 budget proposal

** Survey shows Mexico central bank likely to cut interest rate to 10.50%

Reporting by Ankika Biswas in Bengaluru; Editing by Mark Potter

 
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