* Emerging assets extend falls as G20 optimism subsides
* Little regional impact seen from Moldovan unrest
* Ukraine debt spreads narrow sharply
By Catherine Bosley
LONDON, Apr 8 (Reuters) - Emerging market assets fell on
Wednesday as investors reassessed their positions nearly a week
after the G20's London summit gave risk appetite a boost.
Emerging stocks rallied for five days straight last week,
buoyed by the G20 meeting that enlarged the coffers of the
International Monetary Fund, but the rally has started to run
out of steam.
"Markets are having a pause for breath," said Luis Costa,
emerging debt strategist at Commerzbank.
"We have had a compression of spreads in the past week, and
I'm reluctant to say this is a one-direction move. We are
probably going to finish the day with wider spreads going into
the Easter weekend."
The benchmark emerging stock index <.MSCIEF> fell 1.75
percent to 605.09 by 1015 GMT, its second straight session of
losses.
Emerging sovereign debt spreads <11EMJ> widened 7 basis
points to 584 bps over U.S. Treasuries, an indicator that risk
aversion was growing.
Costa said the G20's new commitment to the IMF would help
the debt of central European countries such as Ukraine, which
has applied to the IMF for assistance.
"The market is coming to the conclusion that given the
amount of multilateral support, it's going to be very difficult
to see any Ukrainian sovereign or quasi-sovereign credit
defaults."
Ukrainian debt spreads tightened by 63 bps on Wednesday,
according to JPMorgan's EMBI+ index.
Costa said the Moldovan unrest, in which anti-government
rioters ransacked parliament, was having little effect on
markets.
Moldova's president accused the opposition -- which favours
closer ties with the West -- of attempting a coup, after violent
protests swept the capital of Europe's poorest country on
Tuesday, leading to the arrest of 193 opposition leaders.
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"People are trying to say this is some kind of Ukrainian
Orange Revolution, which for us makes no kind of sense. The
reaction in CIS countries so far has been muted," Costa said.
Equities in Bucharest <> dropped 0.31 percent,
recovering from early losses of more than 1.20 percent, while
Hungarian shares <> dipped by 0.42 percent.
South African stocks <.JTOPI> slipped by 1.12 percent, as
the Johannesburg market priced in likely weak manufacturing data
for February.
Bucking the trend, Polish shares <> jumped 2.02
percent, while Turkey's index <> rose 0.74 percent. Moscow
stocks <> rose 0.69 percent and equities in Prague <>
gained 0.81 percent.
DOLLAR, EURO UP
Worries about falling stock prices globally prompted
investors to shun riskier assets such as South Africa's rand
<ZAR=>, which dipped 0.69 percent against the dollar. It had hit
a near 5-1/2 month high against the U.S. currency on Monday.
However, Merrill Lynch said the short-term outlook remained
on the upside due to the G20's decision to boost IMF funding.
"The FX outlook has improved in the near term following the
favourable outcome of the London G20 summit. (Eastern Europe)
has much to gain from the serious boost of IMF resources, given
the fact that most vulnerabilities are concentrated in the
region."
Romania's leu was steady against the euro <EURRON=>, off
recent three-month highs.
The forint <EURHUF=> fell 0.48 percent against the euro and
the Turkish lira <TRY=> also fell 0.47 percent against the
dollar, dropping from recent three-month highs.
(Editing by Ruth Pitchford)
