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Emerging market stocks slip by 0.35%

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Basket of currencies poised for biggest daily decline

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Czech inflation eases closer to central bank target

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Hamas-Israel negotiations set for Monday

By Nikhil Sharma

Oct 6 (Reuters) - Emerging market assets slipped on

Monday after a week with strong gains while attention centred on

the Czech Republic after the election victory of Andrej Babis's

ANO party at the weekend.

Billionaire Babis has promised lavish government spending to

raise wages, cut taxes and accelerate economic growth - measures

that would cost billions of euros, end austerity and test the

country's traditionally frugal mindset.

The Czech crown slipped 0.1% while equities in

Prague gained 0.3% to extend their climb to a new high.

Babis said he would seek support for small parties,

including the far-right SPD, to form a majority while rejecting

accusations of plans to direct the country away from the

European Union and NATO.

"The reason that he won the election is basically because

people were very unhappy. The measures that he wants to take are

very popular," said Barry van der Laan, senior FX market

strategist at Monex.

"However, if we lose fiscal discipline ... that could, in

the longer term, put some pressure on the Czech Koruna."

The country's 10-year bond yield fell 5 basis points

to 4.425%. Preliminary data showed Czech headline inflation

eased to 2.3% year on year in September, moving closer to the

central bank's 2% target, despite expectations of a slight

pickup.

Separately, the outgoing centre-right government submitted a

2026 central state budget plan targeting a deficit of 286

billion crowns ($13.81 billion), up from 241 billion crowns in

the 2025 budget.

The MSCI index of emerging market equities fell 0.35%

and was on track to snap five days of gains. The decline

coincides with a sell-off across Europe, fuelled in part by the

collapse of France's new government in a deepening political

crisis.

A broader gauge for emerging market currencies

fell 0.26% - set for its biggest daily decline

since July 29 - as the dollar strengthened after losses in the

previous week.

Elsewhere in central-eastern Europe, the Polish zloty

and main stock index was little changed.

The Hungarian forint dipped 0.1% while Budapest

stocks were largely unchanged. Data showed retail sales

rose by an annual 2.4% in August after a 1.7% rise in July.

Prime Minister Viktor Orban said that Hungary should not adopt

the euro, arguing that the EU is disintegrating and the country

should not tie its fate more closely to the bloc.

Elsewhere, Hamas officials arrived in Egypt on Monday for talks

with Israel, raising hopes of an end to the Gaza conflict and

the freeing of hostages as part of U.S. President Donald Trump's

20-point plan.

Israel's shekel edged up 0.4% at a more than

three-year high, while its international bonds moved slightly

lower.

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