* Emerging markets listless on U.S. holiday, jobs data
* South African rand down over 1 pct
* Polish zloty, Czech crown firm as easing cycle end nears
By Sebastian Tong
LONDON, July 3 (Reuters) - Emerging assets drifted lower on
Friday in trade kept largely listless by a U.S. market holiday
and following Thursday's weak employment data from the world's
largest economy.
South Africa's rand fell over 1 percent against the dollar,
backing off from recent one-year highs, on softening commodity
prices and worries over weaker government revenues.
The benchmark emerging equities index <.MSCIEF> eased 0.1
percent by 1050 GMT while sovereign debt spreads widened 1 basis
point to trade at 430 basis points over U.S. Treasuries.
Weaker oil prices dragged Russian shares <> down 1.5
percent while Czech stocks <> sank to five-week lows.
Profit-taking on emerging equities was further fuelled by
U.S. payrolls data on Thursday showing employers cutting far
more jobs than expected in June.
"The markets are not reacting too badly and it hasn't
translated into palpable falls. But commodities are weaker and
you can't separate emerging markets from oil," said Paul
Hollingworth, head of emerging research at BB Securities.
Data from funds-tracker EPFR showed emerging market equity
funds absorbing $972 million in the final week of June, ending a
quarter when they took in a record $26.5 billion. []
After those stellar gains, emerging markets are likely to
tread water pending further signals to affirm investors' hopes
that the global economy has found a floor.
"Spreads in the past nine months have come in from north of
800 bps to north of 400 bps ... (The U.S. jobs data) is a basic
reality check," said Keiran Curtis, a fixed income fund manager
at Aviva Investors.
CURRENCY STRENGTH
Weaker commodity prices helped drag South Africa's rand 1.3
percent lower versus the dollar <ZAR=>, retreating further from
the 11-month high of 7.62 it hit on Wednesday.
Finance Minister Pravin Gordhan's warning earlier this week
that state revenue collections had deteriorated also weighed,
heightening expectations that the government would be forced to
take a much larger tap of the bond market. []
But pockets of strength remained in emerging currencies
after gains that pushed some of them to multi-month highs.
Central and eastern European currencies were mostly firmer
though Hungary's forint <EURHUF=> eased 0.2 percent after
reaching a seven-month high in the previous session.
Poland's zloty firmed after a central banker said the
country needed no further monetary easing this year.
[]
The zloty firmed 0.4 percent versus the euro <EURPLN=>,
though it remained off six-week highs reached on Monday.
Growing prospects of an end to monetary policy easing also
helped the Czech crown resume its advance against the euro.
The crown, which had touched a seven-month high versus the
common currency on Thursday, firmed a touch <EURCZK=> after the
release of minutes from a central bank meeting on June 25,
showing a lone vote among board members for a quarter point cut.
[]
"We think this relative strength is partly driven by the
ongoing unwind of previous bearish positions and improving forex
liquidity in the local markets as the massive liquidity
injection by the European Central Bank and Swiss National Bank
is finding its way to central and eastern European markets,"
UniCredit analyst Gyula Toth said in a research note.
(Additional reporting by Sujata Rao; Editing by Ruth
Pitchford)
