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EM stocks up 0.7%, FX up 0.2%

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Fitch revises Poland's outlook to 'negative'

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Turkey's main opposition calls for rallies

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World Bank cuts Vietnam's growth forecast

By Pranav Kashyap and Twesha Dikshit

Sept 8 (Reuters) - Indonesian stocks reversed early

gains and the rupiah spiked after the country ousted Finance

Minister Sri Mulyani Indrawati in a cabinet shake-up on Monday,

while Turkish assets continued to slide.

The rupiah spiked 0.7%, set for its biggest intraday

gain in over two months, while stocks in Jakarta quickly

reversed course to fall over 1.2% to an over one-week low.

Her removal follows two weeks of nationwide unrest and

demands by protesters for a fairer tax system. Indonesia

appointed Purbaya Yudhi Sadewa, the head of the Indonesia

Deposit Insurance Corporation, as its new finance minister.

"Mulyani's departure, though not unexpected after recent

unrest, marks the end of an era of fiscal credibility," said

Mohit Mirpuri, fund manager, SGMC Capital.

"She's left strong foundations, and with experienced

technocrats / candidates (like Suahasil Nazara or Chatib Basri)

in the wings, I expect Indonesia will regroup quickly."

Meanwhile, Istanbul stocks fell 1.1% to a six-week

low as the lira hovered near record lows and two-

and five-year bond yields hit one-month

highs.

Tensions spiked as the main opposition CHP urged rallies

after police ringed its Istanbul headquarters with barricades-an

action the party leader denounced as a "siege."

Renewed political uncertainty has sparked a fresh flight

from Turkish assets since a court ordered the dismissal of CHP

officials. The party has faced a months-long legal crackdown,

including against Istanbul Mayor Ekrem Imamoglu-the president's

chief rival-whose March arrest ignited Turkey's largest street

protests in a decade.

"If recent political uncertainties lead to a swift and

sustained deterioration in appetite for lira and place

significant pressure on reserves as we approach the monetary

policy meeting, we believe they would be open to a smaller cut

or even remaining on hold," said Yigit Onay, economist at

Deutsche Bank.

Thailand's baht, meanwhile, hit an over four-year

high against the dollar, as political jitters eased following

the election of its new prime minister on Friday, capping off

months of political uncertainty.

The yield of the country's two-year hit its

lowest in over three years, while stocks in Bangkok were

at their highest in nearly a month.

The MSCI gauge for emerging market stocks rose

0.7%, while a similar gauge for stocks ticked up

0.2%.

Vietnamese equities fell to a two-week low, after the

World Bank trimmed its forecast for the country's economic

growth on evidence that U.S. tariffs were starting to have an

impact on the exporter's shipments.

In central and eastern Europe, most currencies were trading

marginally lower against the euro, while equities were mixed.

Romanian equities fell 0.3% following the broad

coalition government's advancement of deficit-lowering tax hikes

and spending cuts packages after surviving four back-to-back no

confidence votes.

The country currently has the highest budget deficit in the

European Union that it must lower to avert a ratings downgrade

from the last rung of investment grade.

Polish stocks jumped 1.4%, despite Fitch Ratings

revising the country's outlook to "negative" from "stable",

citing growing risks to public finances as the key driver.

EM currencies gained momentum as investors amped up bets on

a Federal Reserve rate cut this month after fresh data signalled

more cracks in the U.S. labour market.

Markets have fully priced a 25 bp move and now assign about

a 10% chance to a larger 50 bp cut-up from zero a week ago, CME

FedWatch showed.

Elsewhere, South African stocks and the rand

hit a two-week high, ahead of the releases of gross domestic

product figures on Tuesday.

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see