* Emerging markets flat on U.S. plans, Russian debt report
* Czech crown leads emerging European FX weakness
* South African, Turkish shares lead equity losses
By Sebastian Tong
LONDON, Feb 10 (Reuters) - Emerging assets waned on Tuesday,
with investor anxiety fuelled by a report -- officially denied
-- that Russia would help its firms restructure some $400
billion of foreign debt as well as further obstacles faced by a
U.S. plan to revive the economy.
The Czech crown <EURCZK=> led losses for emerging European
currencies, down as much as 2.5 percent against the euro amid
rising expectations of further interest rate cuts.
Emerging equities <.MSCIEF>, which have risen over the past
five sessions to outperform their developed market counterparts,
slipped 0.3 percent to 562.98 by 1150 GMT.
"We're having a bit of a pause after several positive days.
The Russia story is certainly a factor in putting investors off
the region even though it's been denied," said Luis Costa,
emerging markets debt strategist at Commerzbank.
Russian Finance Minister Alexei Kudrin denied that the
country would restructure as much as $400 billion in corporate
foreign debt after a Japanese newspaper reported that a local
banking lobby group had asked Moscow for help to negotiate with
creditors. []
Russia's portion on JPMorgan's benchmark Emerging Markets
Bond Index Plus <11EMJ><.JPMEMBIPLUS> widened 15 basis points
over U.S. Treasuries, underperforming the broader index, which
was 7 bps wider.
The country's benchmark 2030 Eurobond <RU011428878=> was
little changed but Russian five-year credit default swaps
<RUGV5YEUAC=MG>, bought to insure against the restructuring or
default of its sovereign debt, were quoted some 20 bps wider
from Monday's close.
Investors are also keeping an anxious eye on the progress of
U.S. plans to kickstart its economy and sop up hundreds of
billions of dollars in bad bank debt.
The U.S. Senate has moved closer to approving a version of
President Barack Obama's $800 billion-plus economic stimulus
package, with a vote later on Tuesday, but delays in fashioning
compromise legislation could still prevent Congress from
delivering a final bill to Obama by his weekend deadline.
Later on Tuesday, U.S. Treasury Secretary Timothy Geithner
is expected to detail a rescue plan to take $500 billion of bad
assets off banks' books. []
POOR NEWSFLOW
Turkish shares <> were among the day's biggest losers,
falling over 2 percent, with financial counters pressured by
falling earnings and the prospect of rising non-performing loans
[].
Fellow emerging market bellwether South Africa was also hit
by a 2 percent selldown on its bourse <.JTOPI> while its rand
currency slid 1.2 percent versus the greenback after data showed
a worse-than-expected 7 percent year-on-year fall in
manufacturing output in December. []
"The newsflow on growth is going to remain very, very poor
and it's going to pressurise currencies," said Tim Ash, emerging
markets research head at the Royal Bank of Scotland.
Emerging European currencies, in particular, have been
sapped by slowing economic growth in the region.
The Czech crown, which jumped in the past week after the
central bank unveiled an average exchange rate forecast for 2009
at stronger levels than now, was down 1.5 percent to trade at
28.11 against the euro.
The unit has lost nearly 5 percent in value against the euro
since the start of the year.
The Czech central bank said on Monday that January figures
indicated the end of a significant drop in inflation but many
analysts expect monetary policy to loosen further.
"We believe the bank board will continue to reduce the main
policy rate further, as the economy is facing a significant
slowdown in activity and strong disinflation," Citi analysts
said in a note to clients.
"We believe a weaker crown is likely to encourage a more
gradual reduction in the central bank's interest rate."
Israeli markets were closed on Tuesday for a closely fought
election.
(Additional reporting by Peter Apps and Phakamisa Ndzamela;
editing by Patrick Graham)
