* Emerging shares at six-week high, Greek bond sale cheers
* Polish zloty hits 15-month high as rate hikes eyed
* Abu Dhabi debt rises, Icelandic risk premiums ease
By Sebastian Tong
LONDON, March 5 (Reuters) - Greece's successful return to
the bond market buoyed emerging markets on Friday and the Polish
zloty hit a 15-month high on prospects of an imminent interest
rate hikes.
Debt issued by Abu Dhabi's government-linked firms traded
higher after Moody's moved on Thursday to cut their ratings, and
Icelandic risk premiums eased ahead of a weekend referendum that
is expected to reject a deal to repay $5 billion in debt to
Britain and the Netherlands.
Rising 0.9 percent by 1335 GMT, emerging shares <.MSCIEF>
hovered at six-week highs, poised for their biggest weekly rise
in four weeks. Emerging sovereign debt spreads <11EMJ> tightened
four basis points to trade at 291 bps over U.S. Treasuries.
Investor sentiment was cheered by stronger than expected
February payrolls data from the U.S. and by the robust response
to Greece's 5-billion euro bond sale which came after the euro
zone member state unveiled austerity measures to rein in its
ballooning deficit. []
"The Greek story seems to be entering a calmer stage
following the bond issue and the market is perceiving that to be
positive. While the economic data has been mixed, it's enough to
signal that the recovery is under way," said Kaspar Bartholdy,
managing director emerging markets at Credit Suisse.
Hungarian shares <> rose over one percent to
four-week peaks while Romanian shares <> edged higher in a
sixth straight day of gains to hit a new 18-month high.
Polish shares <> remained near four-week highs while
Czech shares <> were flat at a one-week high.
Russian shares <> were up over one percent to their
highest levels in a month while Israeli shares <> stayed
firm at their highest levels in over two years.
South African shares <.JTOPI> softened to back away from
their strongest levels in 10-1/2 weeks.
ICELAND, ABU DHABI
Emerging currencies reflected the upbeat mood with South
Africa's rand <ZAR=> holding firm at a one-month high and
Russia's rouble holding steady at its strongest level in 13
months against its dollar-euro basket <RUS=MCX>.
Comments from a Polish monetary policymaker that the central
bank is likely to hike rates in two small steps in the second
half of this year boosted the Polish zloty <EURPLN=>, keeping it
higher against the euro for the eighth straight day.
[]
Bonds of several Abu Dhabi semi-sovereign companies rose in
the wake of their ratings downgrade by Moody's on Thursday.
[]
Investors say the downgrade and the consequent declaration
of support from the government for some of these companies
helped to push prices of these bonds higher as investors had
already priced in greater risk following the debt crisis last
November in the neighbouring emirate of Dubai.
A dollar bond for Abu Dhabi property firm Aldar maturing
2014 <JE043023489=> is trading over a point higher, for
instance.
"We're now getting more clarity from Abu Dhabi on one of the
questions investors now grapple with globally -- the exact
relationship between sovereigns and government-linked entities.
This is an issue not just for the Gulf," said Jeremy Brewin,
Aviva emerging debt fund manager.
Meanwhile, the cost of insuring Icelandic debt for five
years eased nearly 50 bps ahead of a weekend vote that is seen
scuttling a deal to repay the Dutch and the British for losses
arising from the collapse of the island nation's banks.
Five-year credit default swaps were quoted at 450 bps, down
from 492 bps on Thursday close though trading volume was thin,
according to Markit.
Iceland's economy grew 3.3 percent in the last quarter of
2009 from the prior three months, the best performance since the
country's financial meltdown in 2008.
(Reporting by Sebastian Tong; )
