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Kenya forecasts dip in budget deficit to 3.5% of GDP next

FY

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Midea leaps in Hong Kong debut after $4-bln listing

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Sri Lanka, Pakistan and Angola equity markets shut

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FX up 0.2%, stocks gain 0.4%

By Ankika Biswas

Sept 17 (Reuters) - Emerging market assets looked set to

retain their multi-session winning streak on Tuesday, as the

global mood remained upbeat ahead of a crucial U.S. Federal

Reserve monetary policy decision, wherein a wider cut could

further drive risk appetite.

The MSCI index for emerging market currencies

gained 0.2%, standing strong at record levels,

while the stocks gauge climbed 0.4% to a two-week

high.

While the FX index was on track for its first five-day gain

since July, the stocks index was set for its first four-day rise

in a month.

The U.S. central bank will convene for a two-day meeting

later in the day and investors see 69% odds of a 50-basis-point

cut by the Fed on Wednesday. Bets for a bigger cut have picked

up sharply from a week ago, according to LSEG data.

The U.S. retail sales report, due later in the day, will

also be monitored for any surprises in an otherwise slowing

inflation trend in the world's largest economy. The U.S. dollar

index was trading at its lowest levels of the year.

"For the markets, the path and pace of rate cuts in the

coming year will be important beyond the size of the initial

rate cut this week," Commerzbank analysts said.

"The three key themes to watch near-term are the U.S.

election, the health of the economy, and the pace of cuts for

the Fed."

Meanwhile, Kenya's finance ministry forecast a fall in the

budget deficit to 3.5% of GDP in the 2025-2026 fiscal year.

After scrapping tax hikes of over $2.7 billion in June in

the face of nationwide protests, the government eventually opted

for spending cuts and more borrowing.

The Kenyan shilling remained unchanged.

Israeli stocks dropped 1% to a nearly one-month

low, looking to extend losses from Monday, when reports that

Prime Minister Benjamin Netanyahu was considering firing his

Defence Minister shook the political landscape.

The shekel was largely stable on the day.

Elsewhere, Hong Kong stocks rose 1.3% to a two-week

high, with Midea Group's strong gains in debut trade

after the Chinese home appliances maker raised about $4 billion,

bolstering hopes of a revival in large Chinese issuances.

South Africa's benchmark stock index touched a

nearly two-week high, with OUTsurance Group, the

country's third-largest insurer by value, climbing 4.3% on

strong full-year profit.

Poland's blue-chip stocks regained some lost ground

after Monday's nearly 2% fall.

Equity markets in Sri Lanka, Pakistan and Angola were shut

on account of public holidays.

HIGHLIGHTS:

** Czech central bank has room to cut rates further,

Bloomberg reports, citing policymaker Holub

** Fitch Upgrades Tunisia To "CCC+"

** Blinken to travel to Egypt and discuss Gaza ceasefire