*

MSCM equities index, FX both down 0.3%

*

Hungary cenbank's tax-adjusted core CPI gauge eases to 4%

in May

*

Mexico's peso edges up after Morena wins lower house

super-majority but falls short in Senate

By Ankika Biswas

June 10 (Reuters) - Emerging market assets fell on

Monday with political uncertainties preoccupying investors after

a spate of elections, while U.S. inflation reports and Federal

Reserve policy decisions topped this week's watchlist.

The MSCI EM equities index and the currencies

gauge slipped 0.3% each after last week's gains.

The Chinese stock market was shut due to a public holiday.

At the top of investors' radar is the Fed's rate decision

due on Wednesday, with a slew of inflation reports throughout

the week further shaping the outlook for policy after last

week's hot jobs data pointed to a robust U.S. economy.

"High U.S. rates can also exacerbate capital flight out of

EMs in favour of the U.S., which will further tighten local

financial conditions. A significant number of EMs will be hoping

the Fed starts to cut rates soon," said Stuart Cole, head macro

economist at Equiti Capital.

Mexico's ruling Morena party and its allies won a

super-majority in the lower house of Congress but not the

Senate, falling just short of the two-thirds majority needed in

both houses to change the constitution.

The Mexican peso inched up 0.3% against the dollar

in early trade after logging its steepest weekly decline since

March 2020.

In Central and Eastern Europe, official results reported by

the media showed Polish Prime Minister Donald Tusk's Civic

Coalition (KO) came first in European Parliament elections.

The zloty was up 0.1% against the euro, which fell

sharply on political uncertainty after French President Emmanuel

Macron called a snap parliamentary election following his

party's big losses to the far right in the EU vote.

Hungarian Prime Minister Viktor Orban's Fidesz party was on

track for its worst result in a national vote in nearly two

decades, where a political newcomer trounced all other

opposition parties.

The forint fell 0.2%, leading losses among CEE

peers, after Hungarian inflation spiked less than expected,

keeping rate cut expectations alive.

"In CEE, the far right were kept in check and did not do as

well as in some other EU states...The far right certainly made

gains and are now more of a force to be reckoned with, but they

did not do quite as well as had been feared," Cole added.

Israeli minister Benny Gantz resigned from Prime Minister

Benjamin Netanyahu's emergency cabinet, withdrawing the only

centrist grouping from the otherwise far-right coalition. While

this won't pose an immediate threat of a government collapse, it

could leave Netanyahu reliant on hardliners, with no end in

sight to the Gaza war and a possible escalation in tensions.

Narendra Modi was sworn in as India's prime minister for a

third term. Stocks were muted after recouping

steep losses made on June 4 following a shock election setback.

HIGHLIGHTS:

** US, Saudi Arabia close to finalizing draft security

treaty- WSJ

** Turkey unemployment dips to 8.5% in April

** Egypt inflation decreases to 28.1% in May