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EM stocks up 0.2%, FX down 0.06%

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Hungary braces for interest rate decision on Tuesday

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Chile vote propels far-right Kast to runoff against

leftist Jara

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S&P upgrades South Africa for first time in nearly 20

years

By Nikhil Sharma

Nov 17 (Reuters) - Emerging Market stocks steadied on

Monday after the previous session's selloff as investors awaited

the release of delayed U.S. economic data, while the Hungarian

forint was subdued ahead of the country's interest rate decision

later this week.

A broad gauge of emerging-market stocks, the MSCI Emerging

Markets Index rose 0.2% after sliding 1.7% on Friday -

its worst single-day drop since April 7, following U.S. tariff

announcements.

The decline came as hawkish statements from U.S. Federal

Reserve officials diminished expectations for a December rate

cut, erasing equity gains accumulated in the run-up to the end

of the historic U.S. government shutdown on Wednesday.

An index tracking EM currencies traded with

caution, while the U.S. dollar held firm ahead of the release of

post-shutdown economic data that could offer investors more

clarity on the Fed's policy decision in December. All eyes will

be on the closely watched September nonfarm payrolls report due

on Thursday.

"What my expectations are (from the data) is that we will

have this lack of direction that will generate some two-sided

moves until more clarity," said Ipek Ozkardeskaya, senior market

analyst at Swissquote Bank.

In Central-Eastern Europe, attention centered on Hungary's

interest rate verdict on Tuesday, when the central bank is

widely expected to leave its base rate at the European Union's

joint-highest level of 6.5%.

"The market will focus on forward guidance, especially after

the increase in the planned public deficit. While hawkish

guidance is widely expected, there is not much possibility of a

tougher tone compared to previous meetings, building some dovish

risk," analysts at ING said in a note.

The move would reflect growing concerns among policymakers

about higher fiscal spending in the run-up to parliamentary

elections next year and an uncertain inflation outlook.

Last week, the government raised its budget deficit targets

to 5% for this year and next, which prompted traders to dump

long-dated government bonds and reduce exposure to the local

currency.

The Hungarian forint was subdued after declining

about 0.5% last week. S&P Global had warned earlier this month

that a sharp rise in budget deficit and inflation could threaten

Hungary's credit rating.

Budapest stocks rose 0.2% on the day. Warsaw's main

stock index slipped 0.5%, pressured by state-owned

utility firm PGE, which fell 4.6% after reporting

preliminary third-quarter results.

The Polish zloty was flat after briefly surpassing

a seven-month high. The National Bank of Poland (NBP) will

release data on core inflation for October later at 1300 GMT,

amid expectations that inflation to have slowed to 3.0% from

3.2% in September.

The Czech koruna was flat, while Prague's main

stock index was closed for Freedom and Democracy Day.

Elsewhere in EM, the South African rand and international

bonds remained stable, showing tepid moves despite S&P Global's

first credit upgrade of the country since 2005 - a move to "BB"

from "BB-", with a positive outlook.

Meanwhile, the International Monetary Fund mission began

policy discussions with Ukrainian officials on a new Extended

Fund Facility programme, with an objective to strengthen

governance, combat corruption, and enhance growth.

In Chile, governing coalition candidate Jeannette took a

narrow lead in the first round of the presidential vote on

Sunday, but is seen losing to far-right candidate Jose Antonio

Kast in a runoff next month, mirroring recent right-wing

victories across Latin America, where crime remains a key issue.

Kast's potential win would put in place an administration

that is further to the right than any other since the Pinochet

dictatorship. Chile dollar bonds were mixed on Monday.

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