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EM stocks rebound as India shares steady

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Rand weakens as political uncertainty weighs

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Mexican peso rebounds after hitting 7-month lows

By Sruthi Shankar

June 5 (Reuters) - Emerging market stocks rebounded on

Wednesday, aided by stabilising Indian equity markets and

softer-than-expected U.S. economic data that lifted expectations

of an interest rate cut from the Federal Reserve.

The MSCI's EM equities index gained 1.04%, with

India's main stock indexes rising more than 3%

after having logged declines of nearly 6% on Tuesday.

Local markets were knocked lower by concerns about policy

continuity after Indian Prime Minister Narendra Modi's alliance

looked headed for a narrow majority in the country's 543-member

parliament.

"This does not derail the top-down investment case,

predicated on political stability, market-friendly policies and

high headline economic growth," said Hasnain Malik, head of

equity research at Dubai-based Tellimer Research.

"The election result has increased the risk of a populist

tilt in fiscal policy in the short-term, but it may reduce the

risk of divisive social policies and constitutional change in

the long-term."

The Indian rupee ticked up to 83.36 per dollar,

aided by likely intervention from the central bank after the

currency slumped the most in over a year in the previous

session.

Overall, EM currencies were mixed and stocks rose after data

on Tuesday showed that U.S. job openings fell more than expected

in April, raising bets that the U.S. central bank will begin

cutting rates. This week's main economic release will be jobs

data for May, due on Friday, which could give fresh hints on the

Fed's easing plans.

The Mexican peso rebounded 1.2% to 17.64 per dollar

after hitting a more-than-seven-month low of 18.19 on Tuesday

after a strong election victory for Mexico's ruling party over

the weekend sparked concerns about disputed constitutional

reforms.

The Turkish lira steadied after touching near

seven-week lows on Tuesday when Turkey's central bank head said

it could consider decreasing the ratio of foreign exchange

revenues that exporters are required to sell to the bank.

Turkey is also looking to impose a transaction tax on

purchasing and selling stocks and crypto assets.

The South African rand edged lower for a second day

as focus remained on which coalition partner the African

National Congress (ANC) would choose after last week's election

saw it lose its majority. The ANC is set to hold high-stakes

internal discussions on Wednesday as coalition talks get

underway.

Zambia's finance ministry said on Tuesday that holders of $3

billion of its international bonds had approved a bond

restructuring proposal. June 11 is the expected settlement date,

which will allow the new bonds that will be issued as part of

the restructuring to start trading.

HIGHLIGHTS:

** Pakistan keen to access Chinese capital markets, says

finance minister

** Indonesia c.bank to continue intervention to stabilise

rupiah

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