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EM stocks up 0.3%, FX flat; set for weekly advance

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Czech Republic elections on Friday and Saturday

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Turkey's annual inflation jumps, exceeding expectations

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Senegal international bonds rally ahead of IMF board

meeting

By Nikhil Sharma

Oct 3 (Reuters) - Emerging Markets stocks and currencies

inched closer to weekly gains on Friday, but nerves grew as the

Czech Republic election took center stage amid higher odds for a

nationalist-led government.

Opinion polls suggest a comeback for populist billionaire

Andrej Babis, who has pledged to raise wages and lift growth

while reducing aid for Ukraine and shielding voters from dangers

outside borders such as costly climate policies or immigration.

The Czech crown slipped 0.1% on Friday and is set

to end the week on a quiet note. Year-to-date, it has jumped

3.7%.

"We have seen solid performance of the Czech koruna, partly

due to the policy of the National Bank. But things are likely to

change after the elections," said Barry van der Laan,

Senior FX Market Strategist at Monex, pointing out that the

cause for concern would be "the way the government is going to

be formed and which parties are going to be involved in the

majority".

The Czech central bank last month extended its rate pause

and signaled the need for tight policy, citing upside risks to

inflation, and said it was too early to think about raising

rates, according to minutes from the last policy meeting.

Equities in Prague edged up 0.17% to trade at a record

high and have risen 1.4% this week so far.

Meanwhile, the MSCI index of emerging market equities

rose 0.3% on Friday, marking its fifth straight daily

win. It was up 3.4% for the week so far.

Firming expectations for further policy easing by the U.S.

Federal Reserve later this year have supported global equities

throughout the week, offsetting worries about a partial U.S.

government shutdown.

Yet, uncertainty lingered as investors evaluated the

duration of the government closure that delayed a comprehensive

September jobs report, forcing market participants to rely on

Wednesday's private payrolls data to gauge the Fed's future

actions.

The concerns weighed on the U.S. dollar, which was down 0.4%

for the week, allowing currencies elsewhere to shine. A broader

gauge for EM currencies rose 0.3% week-to-date

and remained steady for the day.

The Hungarian forint outperformed its peers, up

5.5% so far this week as its relatively high 6.5% benchmark rate

continued to attract inflows.

Stocks in Budapest jumped 0.5%, set for modest weekly

gains. Polish stocks were among the top performers, up

1.9% , as a benign inflation reading this week opened doors for

Poland's central bank to consider its next rate cut.

The currency zloty remained subdued throughout the

week.

In Turkey, the main BIST 100 share index dropped

0.7% on Friday, while the lira edged 0.1% higher after

the annual inflation rate jumped to 33.29% in September, well

above expectations, reinforcing concerns that the central bank

may need to slow its easing cycle to address stubborn price

pressures.

Elsewhere, Senegal's international bonds extended their

rally as the International Monetary Fund's staff will discuss a

new fund-supported program with the West African country to

begin this month.

The note with 2031 maturity jumped 2.2

cents to the dollar. The IMF board will meet later in the day to

discuss the situation, including a debt misreporting issue.

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