* Emerging shares fall after eight days of gains
* Russian shares, rouble hold gains as oil stabilises
* Turkish lira rallies against broadly weaker dollar
By Sebastian Tong
LONDON, March 20 (Reuters) - Emerging market shares eased on
Friday, snapping an eight-day winning streak as investors
weighed the Fed's massive bond buying plan, although Russian
markets held onto recent gains as oil stabilised above $51 a
barrel.
The Turkish lira <TRY=> rose over 2 percent against a
broadly weak dollar while emerging European currencies staged a
late morning recovery against the euro as the region's central
bankers met in Budapest.
After sending emerging stocks up over 2.5 percent on
Thursday, investors paused to ponder the possible consequences
of the Fed's $300 billion plan to buy longer term government
debt. Concerns that the aggressive Fed move to expand its
balance sheet beyond $2 trillion would fuel inflation weighed on
sentiment, sending emerging equities <.MSCIEF> 0.7 percent lower
by 1120 GMT.
"Emerging markets are taking guidance from global equity
markets ... The equity market is a leading indicator for
(investment in) riskier markets generally," said Beat
Siegenthaler, emerging markets chief strategist at TD
Securities.
"Overall the big theme is whether this whole Fed undertaking
will succeed."
Hopes for the Fed's radical plan, however, helped many
regional bourses to cling onto recent gains. Hungarian shares
<> climbed nearly 2 percent higher to hit their highest in
seven weeks while South African <.JTOPI> stocks hovered at
one-month highs.
Russian shares <> rose 1 percent, aided by oil's rise
above $51 a barrel <CLc1>.
ROUBLE RISE
Resurgent oil prices also helped Russia's rouble to
stabilise after strengthening beyond 39 against its euro-dollar
basket on Thursday. The unit traded at 38.91 <RUS=MCX>, down
marginally by 0.1 percent. The central bank bought dollars to
restrain the rouble's rise on Thursday for the first time since
mid-February.
Credit default swaps (CDS) for Russian sovereign debt,
bought to insure against default or restructuring, were quoted
at 620 basis points, up from 614 bps from Thursday's New York
close.
"There has been some return of optimism in Russia -- CDS
spreads have come down to 600 from almost 800 last week, that's
a very big move," said TD Securities' Siegenthaler.
The Turkish lira shrugged off an interest rate cut of 100
bps, a size anticipated by the market, to climb more than 2
percent against the dollar.
Investors are also watching out for expected interest rate
cuts elsewhere in emerging Europe.
Speaking in Budapest where he is set to meet his regional
counterparts, Poland's central bank governor said Polish
monetary policy was still in an easing bias. []
The Polish zloty led a late morning recovery against the
euro by central and eastern European currencies, rising 0.9
percent against the common currency. <EURPLN=>
The Polish deputy central bank governor said the zloty's
equilibrium would now probably be at 3.6 to the euro.
[]
"Emerging European currencies are looking to see what the EU
can do to help the eastern Europeans. I am optimistic there will
be another big bail-out for eastern Europe," said Carlin Doyle,
emerging markets strategist at State Street Global Markets.
European Union leaders agreed on Friday to double crisis
funds available to members of the bloc that are not part of the
single currency to 50 billion euros ($68.5 billion).
[]
Emerging sovereign debt spreads <11EMJ> were flat to trade
at 638 bps over US Treasuries.
Israel said it was still planning a euro-denominated
benchmark bond this year after selling $1.5 billion in 10-year
bonds on Thursday. []
Meanwhile, Standard & Poor's (S&P) warned that the
restructuring of debts owed by troubled Kazakh banks would have
"irreversible consequences" for Kazakhstan, harming solvent
lenders and damaging the government's reputation. []
(Additional reporting by Carolyn Cohn; Editing by Ruth
Pitchford)
