*

Polish cenbank expected to hold main interest rate at

5.75%

*

South Africa business activity contracts in March: PMI

*

India's rupee hits record low

*

EM stocks add 0.5%, FX up 0.1%

By Bansari Mayur Kamdar

April 4 (Reuters) - Emerging market stocks and

currencies gained on Thursday, feeding off optimism on U.S. rate

cuts, while the zloty was little changed ahead of the National

Bank of Poland's decision on interest rates.

The zloty was flat against the euro by 0820 GMT

ahead of the Polish central bank's decision where it is expected

to hold the main interest rate at 5.75%.

The currency of Central and Eastern European (CEE) peer

Romania, whose National Bank of Romania (NBR) is also

expected to announce its rate decision later in the day, slipped

0.1% against the euro.

"Investors will be looking for any fresh clues when the NBR

may join its CEE peers and start cutting rates," said Piotr

Matys, senior FX analyst at In Touch Capital Markets.

Matys added that they will also be looking for cues on "when

the NBP may resume its easing cycle paused after the opposition,

led by the Civic Platform, came to power following the October

general election."

Overall, the MSCI's index for emerging market stocks

rose 0.5% after U.S. Federal Reserve Chair Jerome

Powell reaffirmed U.S. interest rates were still on course to be

cut this year.

The currencies index edged 0.1% higher as

the dollar retreated ahead of this week's crucial U.S. labour

data.

Emerging market currencies are forecast to drift higher over

the coming year, but much depends on the Fed delivering interest

rate cuts starting around mid-year, according to FX analysts

polled by Reuters.

In Africa, the South African rand rose 0.4% against a

weaker dollar, shrugging of data showing private sector activity

contracted in March as stronger price pressures and drought

conditions affected customer demand.

Tanzania's central bank raised its key interest rate to 6.0%

on Thursday from 5.5%.

China, Hong Kong and Taiwan markets are closed for holidays

in Asia.

South Korea's benchmark KOSPI recovered 1.3%, led by

chipmakers and automakers, after ending Wednesday's session

lower on concerns around the U.S. interest rate path and as an

earthquake in Taiwan sparked concerns about possible disruptions

to the chipmaking industry.

The Bank of Korea is considering overhauling how it provides

guidance on the likely future path of interest rates by

extending the time-frame and giving visual estimates in a bid to

boost transparency, said four sources familiar with the issue.

India's rupee hit a record low against the greenback,

as sustained dollar demand from local importers and high crude

oil prices weighed.

The rupee's exchange rate will not be affected by the recent

volatility in the currency's exchange-traded derivatives, which

was sparked by traders unwinding positions to comply with a

central bank rule, four bankers told Reuters.

HIGHLIGHTS:

** Czech crown expected to be top gainer in CEE - POLL

** Asian FX bears firm as investors mull timeline of US rate

cuts - POLL

** China, Hong Kong, Taiwan markets closed for holidays