Emerging Markets-Steadier, led by S.Africa stocks, Czech crown

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Emerging market assets steadied on Friday, led by South African shares and the Czech crown, in line with a pick up in global equity markets.

Benchmark emerging equities edged up by a quarter percent to 1,285.11, rising from Thursday's two-week low as European shares notched up modest gains.

South Africa's main index scored a 1 percent jump, following gains on Thursday after mining group BHP Billiton made a $140 billion for Rio Tinto .

Emerging sovereign debt spreads narrowed by 2 basis points to 218 bps over safe-haven U.S. Treasuries , indicating a slow trickle of cash into emerging markets.

"The mood is surprisingly good. The market continues to see a global financial crisis that has no major spillover into emerging markets," said Lars Christensen from Danske Bank.

"The extremely leveraged countries like the Baltics, Romania, Bulgaria and Kazakhstan continue to underperform but South Africa and Turkey are doing well."

The Czech crown hit a record high versus the euro and the dollar , helped by Thursday's release of inflation figures showing the highest rate in nearly six years which increased the likelihood of an interest rate hike later this month.

"We expect a hike ... in November by 25 basis points to 3.50 percent, followed by another 25 basis point within the 12-month horizon," Citi said in a research note.

However, further gains in the crown are expected to dampen prospects for monetary tightening.

Czech vice central bank governor Ludek Niedermayer told Reuters on Thursday that sustained currency strength would cut inflation and limit the need for rate hikes.

Political turmoil continued in Pakistan as authorities detained opposition leader Benazir Bhutto at her home on Friday to stop her from holding her first rally since President Pervez Musharraf imposed emergency rule.

Pakistani stocks traded near their lowest level since late September, set on Wednesday. (Reporting by Justyna Pawlak; Editing by Ian Jones)

Keywords: MARKETS EMERGING/

 Emerging Markets Prices from Reuters 
 Equities                  Latest    Net Chg  % Chg  % Chg 
                                                     on year 
 Morgan Stanley   
 Emrg Mkt Indx    1283.15    +1.09   +0.09  +40.60 
 Czech Rep            1860.60    -0.30   -0.02  +17.10 
 Poland            3643.22   -34.17   -0.93  +10.89 
 Hungary            26857.43   +87.80   +0.33   +8.10 
 Slovakia               0.00    +0.00   +0.00 -100.00 
 Romania            9461.07   +13.71   +0.15  +17.53 
 Russia             2287.86    -0.29   -0.01  +19.04 
 South Africa     28526.44  +317.40   +1.13  +26.18 
 Turkey           55107.11   -53.64   -0.10  +40.88 
 China              5315.54   -14.48   -0.27  +98.68 
 
 Currencies              Latest    Prev    Local    Local   
                                   close   currency currency 
                                           % change % change 
                                                    in 2007 
 Czech Rep       26.75     26.91   +0.61    +2.73 
 Poland           3.63      3.64   +0.34    +5.45 
 Hungary        253.35    253.90   +0.22    -0.87 
 Slovakia        33.11     33.15   +0.12    +3.95 
 Romania          3.41      3.39   -0.45    -0.90 
 Ukraine             5.03      5.05   +0.44    +0.40 
 South Africa        6.52      6.51   -0.25    +7.19 
 Kenya              66.47     66.65   +0.27    +4.63 
 Israel              3.92      3.93   +0.12    +7.43 
 Turkey              1.19      1.19   -0.32   +18.99 
 Brazil              1.74      1.75   +0.60   +22.77 
 Mexico             10.84     10.79   -0.44    -0.36 
 
 Debt                 Index   Strip Spd  Chg   %Rtn   Index 
 Sov'gn Debt   EMBI+     219      -1    0.17   429.07 
 
 All data taken from Reuters at 1049 GMT. 
 Currency percent change calculated from the daily U.S. 
 close at 2130 GMT. 
 
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Keywords: MARKETS EMERGING/

[LONDON/Reuters/Finance.cz]