(Bloomberg) -- Emerging-market stocks advanced, led by the biggest rally in Turkey’s benchmark index in more than three months, amid speculation political tension in the country may ease. The lira strengthened, while Russia’s ruble declined.

Turkish stocks climbed 4.2 percent, rebounding from a 14 percent tumble the previous two weeks spurred by a corruption probe embroiling Turkish Prime Minister Recep Tayyip Erdogan’s government. The lira rose 0.8 percent as the central bank said it will sell at least $600 million. The ruble weakened 0.6 percent after suicide bombers killed at least 30 in the southern city of Volgograd and as a seasonal transfer of state budget funds to commercial banks raised the supply of local currency.

The MSCI Emerging Markets Index added 0.4 percent to 1,001.42 as of 12:44 p.m. in London. The gauge is valued at 10.5 times projected earnings for the next 12 months, a 29 percent discount versus the MSCI World Index, the biggest gap in five years. Investors are betting on a “calmer period” in Turkish politics, according to Emre Balkeser, the head of sales and trading at Garanti Yatirim Menkul Kiymetler AS.

“With emerging-market equities having had a very weak year, in particular compared to developed-market equities, I would assess the price movement over the last couple of days as picking up cheap paper, and Turkey in particular buying into bombed out equity,” Michael Ganske, head of emerging markets at Rogge Global Partners Plc in London, said by e-mail.

Nine of the 10 industry groups in the MSCI Emerging Markets Index rose. The measure has lost 5.1 percent this year, compared with a gain of 24 percent for the MSCI World Index.

Corruption Allegations

Turkey’s Borsa Istanbul National 100 Index rebounded from the lowest level since August 2012, increasing the most among 94 global equity gauges tracked by Bloomberg. Erdogan, facing allegations of corruption within his government, accused a “gang” within the police and judiciary of treason as he addressed supporters in a series of rallies over the weekend. The graft investigation prompted him to replace ministers in his cabinet about three months before local elections on March 30.

“There were expectations of some bad news over the weekend on the political side,” Arda Kocaman, the head of treasury at Finans Invest in Istanbul, said by phone. “It didn’t happen. So there’s a relief rally or some short covering. It’s just a no- news-is-good-news bounce.”

Discount retail chain BIM Birlesik Magazalar AS surged 6.4 percent in the steepest advance on the Turkish gauge. Chairman Mustafa Latif Topbas said in an e-mail Dec. 28 that he has never violated law or ethical principles and that he is ready for the scrutiny of all personal and company ties.

Russia Bomb

Hungary’s benchmark BUX Index jumped 1 percent, the most since Dec. 16, as it resumed trading following a four-day holiday. Stocks in the Czech Republic and South Africa gained at least 0.2 percent.

The ruble headed for its biggest drop in more than a month against the central bank’s basket of dollars and euros. At least 14 people died and 28 others were injured when a man detonated a bomb in a trolleybus during rush hour today, the Investigative Committee said. A blast yesterday killed at least 16 people near a metal detector placed at the entrance to Volgograd’s train station, according to the law enforcement agency.

The amount of money commercial banks hold in deposits with Bank Rossii increased to 1.6 trillion rubles ($49 billion), the highest level since January. The government may have “pumped” as much as 200 billion rubles into the system on Dec. 27, VTB Capital analysts Maxim Korovin and Anton Nikitin said in an e- mailed note.

Egypt Constitution

The Egyptian pound extended losses after a regular central bank currency sale, depreciating 0.2 percent to 6.9486 a dollar, the lowest level in almost four months. The nation has seen an increase in violence between the Islamist opposition and the military-backed government in the run-up to a Jan. 14 referendum on a new constitution.

Taiwan’s Taiex climbed 1 percent and the Jakarta Composite Index increased 1.5 percent, narrowing its losses for 2013 to 1 percent. South Korea’s Kospi advanced 0.5 percent to end the year with a 0.7 percent gain. The Shanghai Composite Index and India’s S&P BSE Sensex Index both slipped 0.2 percent.

The premium investors demand to own emerging-market debt over U.S. Treasuries was little changed at 308 basis points, according to JPMorgan Chase & Co. indexes.

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