* Emerging stocks up on day as worst year on record nears
end
* Israel assets largely unaffected by Gaza conflict
* Ukraine hrvnyia loses 5 percent, above year lows
By Peter Apps
LONDON, Dec 30 (Reuters) - Emerging equities rose in quiet
trade on Tuesday as they drew to the end of their worst year on
record, while Israeli assets continued to largely shrug off
conflict in Gaza despite a mounting death toll.
By 1100 GMT, benchmark emerging equities <.MSCIEF> were up
0.83 percent, following other global stock markets higher on a
year end rally on the penultimate trading day of 2008.
But having begun the year boasting they were "decoupled"
from problems in developed economies, emerging markets have lost
more than their more established counterparts with stocks down
55 percent year-on-year, demolishing three years of gains.
Already spooked by a resurgent dollar and some unnerved by
war between Russia and Georgia in August, investors
indiscriminately dumped anything seen as risky after the
collapse of Lehman Brothers in September.
With market players exhausted by brutal volatility and many
still on holiday after Christmas, trade was light on Tuesday,
exacerbating moves as investors looked ahead to a new year
ushered in with increasingly grim economic data.
"Liquidity is exceptionally low and this is driving some of
the movements we have seen in the past few days," said Martin
Blum, head of eastern Europe, Middle East and Africa research at
Unicredit in Vienna.
"We've had a strong global equity backdrop but we have to
keep in mind that we are ending the year with a more bearish
growth outlook for 2009 and that has been mostly priced in."
Emerging sovereign debt spreads <11EMJ> were seven basis
points narrower at 691 over US Treasuries, another measure of
renewed risk appetite but still more than double their levels at
the start of the year.
Stocks in the Czech Republic <> were up 1.80 percent,
Poland <> up 1.79 percent and Turkey <> 0.55
percent.
But with oil and commodity prices retreating after a brief
spike on the back of Israel's airstrikes into the Gaza Strip,
stocks in Russia <> were down 1.90 percent and South Africa
<.JTOPI> down 0.23 percent.
Israel on Tuesday rejected any truce with militant group
Hamas before crossborder rocket fire ceased, saying a fourth day
of airstrikes that Palestinian officials say have killed almost
350 heralded "long weeks of military action" [].
Israeli stock markets have largely ignored the conflict
after a brief Sunday fall, while the shekel currency <ILS=> was
up 2.13 percent a day after a larger than expected rate cut.
Ratings agency Standard & Poor's told Reuters on Monday it
was "reviewing the implications" of the conflict on Israel's
creditworthiness, but rival Fitch saw no immediate ratings
action saying potential conflict was already factored in.
"Recent military conflict in Israel have had little impact
on Israeli markets but if this conflict worsens, there will be
consequences for the economy," said Miroslav Plojhar, eastern
Europe, Middle East and Africa economist at JP Morgan Chase.
Other currencies were mixed, with Romania's leu <EURRON=>
rising 2.71 percent from 4-year lows on Monday on worries over a
bloated budget, trade deficits and hard-currency demand. The
Polish zloty <EURPLN=> lost 0.51 percent but remained above 3
1/2 year lows set on Monday.
The Turkish lira <TRY=> firmed 0.42 percent but South
Africa's rand <ZAR=> lost 0.84 percent.
Iceland's devastated crown, which collapsed along with its
banking sector as the first sovereign victim of the financial
crisis, was barely traded with the gulf between its value in
international markets <EURISK=D3> and the mainly
government-controlled local market <EURISK=> slowly narrowing at
200 and 171 to the euro respectively.
Ukraine's hrvnyia <UAH=>, Europe's second worst performing
currency which at one point this month had lost half its
September value, sank 5.37 percent but held above recent lows.
Banking problems, political worries including a row over gas
delivery with Russia and a slump in steel prices have devastated
the Ukrainian economy despite a 16.4 billion loan from the
International Monetary Fund, with dozens of abandoned unfinished
buildings left dotting the Kiev skyline [].
(Additional reporting by Sebastian Tong; Editing by Ruth
Pitchford)
