* Emerging stocks edge up, debt spreads inch in
* Hungarian forint recovers from record low vs Swiss franc
* Philippines to sell debut peso global bond
* Rand up despite expectations for S.African rate cut
By Carolyn Cohn
LONDON, Sept 9 (Reuters) - Emerging assets edged up on
Thursday, with the Hungarian forint recovering from record lows
against the Swiss franc, helped by a successful bond auction,
but the overall mood across markets remained cautious.
A rise in the euro helped emerging markets in early trade,
suggesting improving risk appetite, but the single currency
later retreated on persistent concern about the health of
European banks.
Concern about the banking sector and the potential impact on
sovereign debt levels have hit risky assets this week although
there are signs that east European markets are beginning to
shrug them off.
Emerging markets have suffered from a risk-on, risk-off
attitude from investors in recent weeks.
"We're moving on from concerns over European banks. The
euro/dollar remains a key driver for emerging markets and you
can expect eastern European currencies to rise if the euro
strengthens further," said Roderick Ngotho, senior CEEMEA
strategist at RBS.
"Investors would like to add risk but they don't like the
volatility that we're seeing now."
The MSCI emerging equities index <.MSCIEF> rose 0.3 percent
and the Thomson Reuters emerging Europe index <.TRXFLDEEPU>
steadied.
Emerging sovereign debt spreads tightened by 5 basis points
to 286 bps over U.S. Treasuries <11EMJ>.
Stable spreads are encouraging emerging market borrowers to
issue debt in the last few months of 2010. Russian state bank
Sberbank <SBER03.MM> said it would hold investor meetings next
week, and the Philippines mandated six banks for a maiden peso
global bond. []
The order book for the Philippines bond has reached $2
billion so far and the deal is expected to price on Thursday, at
initial guidance of 5-5.25 percent, sources told Reuters. Asian
corporates are also issuing bonds.
FORINT RECOVERS
The Hungarian forint recovered from 1-1/2 month lows against
the euro <EURHUF=> and record lows against the Swiss franc
<CHFHUF=> set in the previous session, helped by a recovery in
the euro/Swiss franc <EURCHF=> rate.
Hungary sold 70 billion forints worth of government bonds
at auction on Thursday, 20 billion forints more than planned.
That helped push down debt insurance costs from recent
three-month highs, with five-year credit default swaps down to
364 bps from 369.5 bps at Wednesday's close, according to CMA
DataVision.
Budapest on Wednesday commited to keeping its budget
deficit at 3.8 percent of GDP this year and cutting it in 2011.
However, internal political wranglings, the absence of a new
International Monetary Fund deal and resurgent worries about
European debt levels are leaving Hungary vulnerable.
"The main threat for Hungary relates to the risk of a
sovereign debt crisis erupting in the European Union periphery,"
said analysts at Societe Generale in a client note.
"With its poor debt ratios and the conundrum about the
financing prospects in the absence of a new IMF programme,
Hungary is on top of the list of the contagion targets in
emerging markets if the market scare about an imminent sovereign
crisis re-emerges."
The rand rallied 0.75 percent <ZAR=> towards recent 2-1/2
year highs as the market had already priced in expectations the
central bank would cut interest rates by half a point at a
meeting later in the day.
The rand has been boosted in recent months by strong
commodity prices.
"The market impact of a 50 basis point cut today should be
limited as it is widely expected, but more dovish comments at
the press conference could weigh on the rand," SocGen analysts
said in their note.
(Additional reporting by Sebastian Tong; Editing by Susan
Fenton)
