*

EM stocks up 0.4%, FX flat

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Romania's interest rate decision later in the day

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Romanian inflation inches lower in line with expectations

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US financial shield could be worth up to $20 billion,

Hungary's

Orban says

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South Africa mid-year budget review around 1200 GMT

By Nikhil Sharma

Nov 12 (Reuters) - Emerging market equities extended

their winning run on Wednesday, as hopes for an imminent end to

the U.S. government shutdown continued to burnish risk assets,

while investors awaited Romania's interest rate decision.

Members of the House of Representatives headed back to

Washington on Tuesday after a 53-day break for a vote that could

bring the longest U.S. government shutdown in history to a

close.

MSCI's index of emerging market stocks rose 0.4%

after two straight days of gains, mirroring moves in Asian

equities, also underpinned by hopes for an end to the shutdown.

"This is really about the removal of a level of uncertainty

that had been weighing on markets for about 40 days," said Fiona

Cincotta, senior market analyst at City Index.

"When we remove any element of uncertainty, then that's

considered a positive, and that sort of optimism is lifting risk

sentiment and boosting risk appetite, and we are seeing that

across the global markets."

A parallel gauge for EM currencies was

subdued, with most currencies from central-eastern Europe

trading in the red.

The usually quiet Romanian leu was down 0.1% ahead

of a rate decision later in the day, amid wider expectations

that the central bank will keep rates on hold at 6.50% in the

face of price pressures triggered by higher taxes and energy

prices.

Bucharest stocks edged up 0.4% to hit an all-time

high. Data showed annual inflation inched lower in October in

line with market expectations but remained near its highest

levels since mid-2023.

Moves in the Hungarian forint have been in focus

ever since Prime Minister Viktor Orban secured a temporary

reprieve from U.S. sanctions on Russian oil imports. Orban, who

faces an election next year, also struck an agreement with

Washington that could unlock about $20 billion worth of credit.

For the day, the currency fell 0.6%, set to extend its

losses from the previous day, after Hungary raised its budget

deficit targets to 5% for this year and next, with higher

spending ahead of the 2026 elections.

Budapest's blue-chip index climbed 1.2%, after

declining about 0.6% in the prior session. The Czech koruna

was largely flat, while Prague's main stock index

jumped 0.44% to hit an all-time high.

The Polish zloty fell 0.13% and the main stock

index was flat as investors speculated about the

central bank's next policy move. Central banker Henryk Wnorowski

suggested a pause on more rate cuts until the March inflation

outlook to assess the effects of earlier easing and to ensure

inflation remains within target.

The National Bank of Poland cut its benchmark rate by 25

basis points to 4.25% last week, citing a slowdown in inflation

and an improvement in its outlook.

Elsewhere in EM, the South African rand edged up

0.14% ahead of a mid-year review of public finances at around

1200 GMT amid wider expectations that Finance Minister Enoch

Godongwana will present a healthier fiscal picture than at the

main budget in May, thanks to stronger revenue collection.

Political unrest engulfed Ukraine after the government

suspended Justice Minister German Galushchenko, amid an

investigation into corruption in the energy sector.

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