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EM stocks up 0.25%, FX down 0.2%

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Hungary to announce corporate tax cuts in November

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Czech industrial output unexpectedly falls in August

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Poland's 2024 GDP revised to +3.0% y/y

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Vietnam braces for FTSE decision on market upgrade

By Nikhil Sharma

Oct 7 (Reuters) - Emerging market stocks rose on

Tuesday, but currencies fell as the U.S. dollar strengthened,

while attention shifted to Poland as it braced for a key

interest rate decision.

The MSCI index of emerging market currencies

fell 0.2% - the most since August 26. The dollar index

rose 0.31% amid political shifts in Japan, where fiscal dove

Sanae Takaichi is set to become prime minister.

Meanwhile, a gauge of emerging market equities

added 0.25% after modest losses in the previous session.

Investor attention centered on Poland, where the Monetary

Policy Council commences its two-day interest rate meeting on

Tuesday and is expected to keep rates unchanged at 4.75%.

While delivering a modest cut in September, the central bank

pointed to a decline in inflation, drew attention to risk

factors related to fiscal policy and higher wage growth, and

took a data-dependent tone.

Recent inflation numbers showed price pressures within the

National Bank of Poland's target range. On Tuesday, the country

revised its 2024 gross domestic product to 3.0% year-on-year

from 2.9% published earlier.

The local currency zloty slipped 0.1% and Polish

stocks gained 0.6% on Tuesday.

"While inflation remains benign and the National Bank of

Poland maintains an easing bias, markets are increasingly

focused on fiscal credibility," analysts at Monex said in a

note.

Hungarian stocks rose 0.45%, while the forint

tumbled 1% after Hungarian Prime Minister Viktor Orban

said on Monday that the country's key interest rate of 6.5%,

joint-highest in the European Union, was "higher than it could

be."

The currency is up about 5% year-to-date, with sky-high

interest rates making the forint a carry trade favorite.

Meanwhile, Hungary also disclosed plans to cut taxes for

companies next month to offset the negative effects of weak

European growth and U.S. tariffs.

Concerns about fiscal indiscipline mounted in neighboring

Czech Republic after the election victory of populist ANO leader

Andrej Babis, who ran his campaign assuring government spending

to raise wages, cut taxes, and accelerate growth - measures that

would cost billions of euros.

The Czech crown fell 0.2% after minor losses on

Monday, while Prague equities declined 1% - on pace for

the worst day since April 30.

Fresh data underscored Czech growth worries as industrial

output unexpectedly fell by 1.3% year-on-year in August, after a

1.8% rise in July. Analysts polled by Reuters had expected a

0.6% year-on-year increase.

Elsewhere, Vietnam prepared for a decision on Tuesday by

index provider FTSE Russell that could upgrade its stock market

to emerging status alongside China and India, potentially

unlocking billions of dollars in foreign investment.

The country's main stock index cooled 0.6% after

climbing more than 3% on Monday, while the local currency dong

was largely flat.

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