By Karin Strohecker LONDON, Sept 7 (Reuters) - Emerging stocks gained and some currencies strengthened on Thursday, led by the Chinese yuan rising above a key rate of 6.5 per dollar as a U.S. debt ceiling deal and receding prospects of Fed rate hikes boosted risk appetite.

Markets around the globe were in a positive mood after U.S. President Donald Trump and congressional leaders unexpectedly agreed to raise the government debt limit until December.

Adding to this was the fading prospect of a U.S. interest rate hike after Fed Vice Chair Stanley Fischer, a veteran central banker who helped set the bank's course, said he would step down in mid-October.

MSCI's emerging markets benchmark rose 0.4 percent, boosted by gains in Asia and also Russia and other emerging European bourses .

Heavyweight South Korea provided the biggest lift, jumping more than 1 percent and snapping a five-day losing streak, also boosted by Washington suspending plans to end its free trade pact with Seoul for now.

That boosted the won , which strengthened 0.2 percent against a flagging dollar .

"With the annual U.S. debt ceiling jamboree ending in a temporary three months Trump-Democrat agreement and all waiting to see where (North Korean leader) Kim, shoots his next missile, markets are taking a breather," Simon Quijano-Evans, strategist at Legal & General Investment Management wrote in a note.

The yuan was another winner, rallying through the 6.5 per dollar for the first time since May 2016, with the onshore spot yuan reaching a high of 6.4969 in its ninth straight session of gains before slipping back. The yuan has strengthened nearly 7 percent since the start of the year.

Data showed Chinese foreign exchange reserves edged up in August for a seventh straight month, though slightly less than expected.

Shrugging off lower oil prices , Russia's rouble strengthened 0.5 percent. Fellow crude producer Kazakhstan saw the tenge rebound from a 10-month low and jump nearly 2 percent after the central bank said the currency was undervalued against the rouble and disclosed recent interventions.

South Africa's rand eased 0.5 percent against the dollar.

Currencies across Central and Eastern Europe trod water against the euro ahead of a decision by the European Central Bank, where President Mario Draghi is set to start laying the groundwork for a cut in monetary stimulus.

A subdued outlook for inflation means Draghi is however unlikely to make any commitment yet.

"The next question for emerging markets will be what Mr Draghi says... today, especially given the underperformance of the more 'dollar-based' emerging markets FX versus an unexpectedly stronger euro year-to-date," Quijano-Evans added.

Serbia's central bank is expected to keep its benchmark interest rate at 4 percent for the 14th straight month later in the day as it weighs low growth and economic pressures at home against uncertain monetary policy developments abroad.

For GRAPHIC on emerging market FX performance 2017, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2017, see http://tmsnrt.rs/2dZbdP5 For CENTRAL EUROPE market report, see For TURKISH market report, see For RUSSIAN market report, see ) Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg on year Morgan Stanley Emrg Mkt Indx 1087.64 +4.46 +0.41 +26.14 Czech Rep 1024.43 -0.52 -0.05 +11.16 Poland 2517.22 +4.82 +0.19 +29.23 Hungary 37956.33 +77.47 +0.20 +18.60 Romania 8019.65 +3.92 +0.05 +13.19 Greece 813.98 +2.28 +0.28 +26.47 Russia 1114.71 +8.01 +0.72 -3.26 South Africa 48762.61 -261.05 -0.53 +11.07 Turkey 09637.68 +25.88 +0.02 +40.31 China 3366.43 -18.96 -0.56 +8.47 India 31663.14 +1.17 +0.00 +18.92 Currencies Latest Prev Local Local close currency currency % change % change in 2017 Czech Rep 26.09 26.09 -0.02 +3.50 Poland 4.25 4.25 -0.00 +3.70 Hungary 305.88 306.29 +0.13 +0.96 Romania 4.60 4.59 -0.02 -1.31 Serbia 119.29 119.33 +0.03 +3.40 Russia 57.09 57.37 +0.50 +7.32 Kazakhstan 334.79 341.30 +1.94 -0.34 Ukraine 25.98 26.00 +0.08 +3.93 South Africa 12.83 12.76 -0.57 +7.00 Kenya 103.05 103.10 +0.05 -0.66 Israel 3.54 3.55 +0.09 +8.65 Turkey 3.42 3.42 +0.02 +3.00 China 6.50 6.52 +0.39 +6.87 India 64.03 64.06 +0.04 +6.11 Brazil 3.10 3.10 +0.02 +4.98 Mexico 17.75 17.79 +0.21 +16.71 Debt Index Strip Spd Chg %Rtn Index Sov'gn Debt EMBIG 319 2 .05 8 06.36 1 All data taken from Reuters at 09:10 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT.

(Reporting by Karin Strohecker, Graphic by Alexander Winning; editing by John Stonestreet)