*

Soft U.S. data lifts rate cut hopes

*

Rand stabilises after two-day selloff

*

CEE currencies dip vs euro ahead of ECB

By Sruthi Shankar

June 6 (Reuters) - Emerging market equities extended

gains on Thursday, as soft U.S. labour market data renewed bets

of an interest rate cut by the Federal Reserve this year, while

investors assessed the political path in major economies

following a slew of elections.

The MSCI's index of EM equities climbed 0.9%,

rising for a second session as U.S. Treasury yields came under

pressure after data pointed to a moderating labour market.

The dollar slipped against major currencies as investors

priced in nearly 50 basis points of rate cuts from the Fed this

year, with the first expected to come in September.

The South African rand rose slightly to 18.89 per

dollar, after touching a six-week low on Wednesday on concerns

about who the African National Congress would form a coalition

with, after it lost its majority for the first time in 30 years

in last week's election.

The ANC is leaning towards trying to form a government of

national unity for South Africa, it said on Wednesday, but the

second-largest party said it would not join a government that

included some of its smaller rivals.

"The option of a coalition with EFF (Economic Freedom

Fighters) and MK (uMkhonto we Sizwe) implies a big shift...many

things will be very complicated for the mining sector that will

have a big cost for the budget," said Sergi Lanau, director of

global EM strategy at Oxford Economics.

"If it's with the Democratic Alliance and other small

parties, then it's a government that mixes a bit of everything.

It would be a relief for markets and over the next few years it

would most likely be a status quo."

The Indian rupee slipped, while the Mexican peso

strengthened in volatile trading sparked by their

respective election outcomes this week.

In Central and Eastern Europe, the Hungarian forint

and the Polish zloty dipped against the euro

ahead of the European Central Bank's policy decision, which is

widely expected to be a rate cut.

Currencies in the region hit multi-month or multi-year highs

in May amid signs of an economic recovery as central banks

continue to pause or look to slow interest rate cuts.

Poland's central bank left its main interest rate on hold at

5.75% on Wednesday as expected. The National Bank of Poland's

Governor Adam Glapinski is set to host a press conference later

in the day.

Stock markets in Budapest, Warsaw and Prague

rose marginally, tracking a positive mood in Europe.

HIGHLIGHTS:

** Putin says Russia could deploy missiles in striking

distance of the West

** Hungary has no plans to stop buying gas from Russia,

minister says

** Unwinding of hugely popular currency trade rocks markets

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see