(Updated at 0935 GMT)

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Sri Lanka to wrap up debt restructuring talks soon

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Hungary's June CPI slows, comes in below expectations

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China's June new yuan loans seen surging on supportive

policy

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Stocks up 0.3%, FX flat

By Johann M Cherian

July 9 (Reuters) - Most emerging markets currencies were

little changed on Tuesday, but Hungary's forint fell for the

second day after the government announced new tax policies,

while focus shifted to Kenyan assets following a credit rating

downgrade.

MSCI's index tracking developing markets equities

added 0.3%, while an index tracking foreign exchange

was flat against the dollar.

In central and eastern Europe, Hungary's forint

weakened 0.4% against the euro, extending Monday's drop after

the local government unveiled taxes on firms in an effort to

balance the budget, where the deficit averages nearly 7% of

economic output for the past four years.

"This could cover the fiscal risk we saw earlier and the

current official target of a 4.5% of GDP government deficit

could be achieved. This is particularly good news for Hungarian

government bonds (HGBs) and issuance in the rest of the year,"

said Frantisek Taborsky, EMEA FX & FI strategist at ING

research.

Separately, data showed domestic inflation in June was

softer than economists were expecting.

Most other currencies in the region were little changed.

In Africa, yield on Kenya's dollar bond

maturing in 2034 ticked up over 10 basis points (bps) after

Moody's cut the east-African nation's sovereign rating deeper

into junk territory.

Bond prices slid in June after the country's President

William Ruto bowed to pressure and failed to introduced tax

hikes as part of the International Monetary Fund's process to

economic stability.

Moody's believes the spending cuts that Ruto opted for

instead could make the Kenya's debt affordability to remain

weaker for longer.

Meanwhile, yield on Chinese bonds across the board

dipped between 2

and four basis points (bps), while the yuan was

little changed with focus on a possible central bank

intervention in the bond market.

A Reuters poll showed China's new yuan loans likely more

than doubled in June from May, as the regulator kept up policy

support for the economy, ahead of the 'Third Plenum' meeting

between July 15-18, where markets expect more reforms.

In south Asia, Sri Lanka's rupee inched up 0.1%

against the dollar, while yield on dollar bonds maturing in 2030

rose 42 (bps). Its foreign minister said it will wrap up talks

with international bondholders on restructuring $12.5 billion in

debt within a few weeks.

Separately, the island nation's parliament is expected to

vote on an amendment that will allow Elon Musk's Starlink, the

satellite unit of SpaceX, to set up operations.

Later in the day, investors will parse U.S. Federal Reserve

chair Jerome Powell's comments for any clues on the central

bank's outlook for monetary policy.