* Emerging shares flat after Portugal rating cut chills
* Argentina, Ukraine prospects seen improving
* Russian rouble overcomes profit-taking to head up
LONDON, March 24 (Reuters) - Emerging shares were flat on
Wednesday with recent gains threatened by renewed sovereign
default fears but Russia's rouble overcame a bout of
profit-taking to resume its ascent to 14-month highs.
Risk premiums for Dubai fell as hopes heightened for a
creditor-friendly resolution to its leading conglomerate's debt
restructuring while investors continued to rehabilitate former
market outcasts Ukraine and Argentina.
Fitch's move to cut Portugal's sovereign rating by one notch
to AA- over budgetary underperformance fed concerns stirred by
the absence of a resolution to Greece's debt crisis.
[]
Ahead of a European Union summit on Thursday and Friday,
Greece urged Europe to come to its aid. []
Emerging shares <.MSCIEF> broke a three-day losing streak on
Monday but those gains look increasingly fragile with the index
unchanged at 1145 GMT.
"There have certainly been jitters today, based on the
Portugal downgrade ... Everything has been remarkably contained
so far, but when you start to get contagion to other big
countries, the issue gets more alive," Nomura EMEA economist
Peter Attard Montalto said.
Czech shares <> slid 0.5 percent to two-week lows while
Romanian shares <> fell one percent after touching a
19-month high.
Bucking the trend were Hungarian shares <> which firmed
0.5 percent to 13-month highs and Israeli shares <> which
edged up to near 27-month peaks.
Turkish shares <> were flat but hovered at their
highest levels in seven weeks.
REHABILITATION
Emerging sovereign debt spreads measured by JP Morgan's EMBI
Plus index <11EMJ> narrowed six basis points, trading at their
tightest levels over U.S. Treasuries since mid-2008.
Argentina's share of the index fell 21 basis points to 648
bps -- the lowest since Aug 2008 while five-year credit default
swaps (CDS) used to insure against exposure to its debt were
quoted just over 890 bps, the tightest levels since October
2008.
The country is launching a debt swap and announced it would
sell a new $1 billion bond, marking a return to international
global markets after its massive default eight years ago.
[]
Investor sentiment on Ukraine is also improving.
Local bond yields have fallen as low as 11 percent, less
than half the 30 percent levels seen at the start of the year.
"We continue to see yields coming down potentially to 10
percent in the coming auctions, especially if the IMF deal
progresses quickly," Unicredit analysts said in a note.
The country is seeking a new deal with the International
Monetary Fund, whose mission arrives in Kiev on Wednesday.
[]
"We maintain our favourable view on the hryvnia <UAH=>,
where non-deliverable forward yields have come down sharply in
past days, and have still room to go," they added.
Emerging currencies were mixed but the rouble resumed its
seven-week rally <RUS=MCX> to approach the 14-month highs it hit
last week as oil <CLc1> steadied above $80 a barrel.
Meanwhile, the cost of insuring Dubai sovereign debt against
default eased to its lowest levels since mid-January with
five-year CDS down 15 bps from the previous close, according to
Markit data.
Dubai government assistance will feature in proposals to
creditors to restructure the $26 billion debt of the emirate's
leading conglomerate Dubai World.[] []
(Reporting by Suajata Rao and Sebastian Tong; additional
reporting by Carolyn Cohn; Editing by Ruth Pitchford)
