* Stocks up on Citigroup, Obama economic team
* Pakistani rupee firms on IMF deal
* Hungarian forint falls day after surprise rate cut
By Peter Apps
LONDON, Nov 25 (Reuters) - Emerging equities rose on Tuesday
on relief over the rescue of troubled bank Citigroup and the
appointment of a new U.S. economic team, while the Pakistani
rupee firmed on an IMF deal but the Hungarian forint fell after
a surprise rate cut.
Benchmark emerging equities <.MSCIEF> rose 2.22 percent by
1125 GMT, building on the previous day's gains but remaining
down more than 60 percent this year.
Investors are increasingly pricing in a relatively harsh
global recession next year, but enthusiasm over the appointment
of President-elect Barack Obama's economic team coupled with the
Citigroup bailout prompted some to look past that to growth and
recovery beyond.
Russian stocks <>, which have suffered more than most
from the recent markets crashed and remain down more than 70
percent on the year, rose 6.77 percent while South African
equities <.JTOPI> were up 5.74 percent.
"The global picture has brightened considerably with news
from the US on Obama's cabinet appointments and Citigroup's
rescue," said UniCredit emerging Europe equity strategist Roger
Monson. "This has allowed people to consider the positives
rather than negatives. Investors are trying to position
themselves what they think might be a brighter picture next
year."
Emerging sovereign debt spreads <11EMJ> responded less
enthusiastically, narrowing only two basis points to 717 over US
Treasuries in a very modest display of increased risk appetite.
Official data is already showing drastic slowdown is in
emerging markets. South Africa's economic growth slowed to a
decade low of annualised 0.2 percent in the third quarter, data
showed on Tuesday, with a series of interest rate hikes hitting
domestic demand [].
The Pakistani rupee firmed on Tuesday a day after the
International Monetary Fund (IMF) approved a $7.6 billion loan
to avert a balance of payments crisis, allowing it to cover an
international sovereign bond maturing in February [].
RATE CUTS TO COME?
Economic problems, political instability and growing
conflict in its tribal regions left Pakistan one of the most
exposed countries to the recent credit crunch, which has also
sent several emerging European economies including Ukraine,
Hungary, Belarus, Latvia, Serbia and Iceland going to the IMF.
Emerging European currencies were mixed. The Polish zloty
<EURPLN=> was up 0.14 percent but the Czech crown <EURCZK=> was
down 0.27 percent and the Hungarian forint <EURHUF=> lost 0.85
percent.
Hungary surprised by cutting rates by 50 basis points to 11
percent on Monday, Central bank deputy governor Ferenc Karvalits
said on Tuesday further rate cuts were possible before the end
of the year [].
Malaysia also cut rates on Monday by 25 basis points,
following a surprise cut by Turkey the previous week.
"The surprise rate cuts... have signalled remarkable
confidence amongst emerging market central bankers," said TD
Securities emerging strategist Beat Siegenthaler. "The
unexpected cuts have not led to currency will weakness, which
may well encourage copycat elsewhere in the region and even
globally."
But he warned another bout of risk aversion and stock market
falls could quickly erase the confidence and possibly even force
some of the banks into reverse.
Ukraine's hrvynia <UAH=> continued its falls, losing 2.16
percent against the dollar. Having haemorrhaged reserves trying
to support the currency, Ukraine's central bank has begun to let
it fall further.
Battling banking problems, falling steel prices and
difficulties refinancing its debt, Ukraine is in talks with
Russian gas export monopoly Gazprom in Moscow to discuss its gas
debt, which the Russian firm says amounts to $2.4 billion and
Ukraine considers to be half that.
(Additional reporting by Sebastian Tong; editing by Tony
Austin)
