* Benchmark equities weaker, Citigroup rallies some markets
* Russia, Ukraine allow currencies to slip
* Emerging currencies, debt broadly stronger
By Peter Apps
LONDON, Nov 24 (Reuters) - Emerging equities were mixed on
Monday, supported by a $20 billion U.S. government capital
injection for Citigroup <C.N> while Russia allowed its rouble
currency to weaken for the second time in two weeks.
The benchmark emerging equities index <.MSCIEF> was down
0.17 percent by 1100 GMT, with several key Asian markets down,
but stock exchanges in Europe, the Middle East and Africa were
broadly stronger after the Citi announcement.
The Citigroup bailout is the largest rescue of a bank yet,
and the intervention is both a positive sign of government
commitment to the sector and an indication of how serious
Western banking problems have become. []
The increasingly gloomy economic picture from both developed
and developing economies leaves little confidence that the
emerging equities index will not again test 4-year lows set last
month.
"The weekend news of Citibank's bailout helped set a
positive tone for the markets but that relief is offset by the
still awful economic news out there," said Credit Suisse head of
sovereign strategy Kasper Bartholdy.
He said further deleveraging was still to take place as
people pulled money from investment funds and margin calls from
banks forced a sell-off. Emerging equities are now down roughly
63 percent this year.
"This process is not based on value judgements or forecasts
of economic or corporate performance," he said. "The sell down
has been intense in recent weeks because some financial players
want to square their books before the end of the year."
Indian stocks <> seesawed between positive and
negative territory, provisionally closing down 0.6 percent
having recovered some earlier losses on the Citigroup rescue
plan. Chinese shares <> lost 3.67 percent.
ROUBLE DEVALUED
Russian equities <> rallied 3.5 percent, while Turkish
stocks <> rose 5.6 percent and Polish stocks <> 3.9
percent.
Emerging sovereign debt spreads <11EMJ> were 13 basis points
narrower at 748 over US Treasuries, suggesting they were seen as
relatively less risky compared with last week.
The South African rand <ZAR=> was nearly 1 percent stronger
against the dollar and the Turkish lira <TRY=> up 3.8 percent.
Central European currencies were broadly stronger, with the
Czech crown <EURCZK=> and Polish zloty <EURPLN=> 1.1 and 0.5
percent firmer against the euro respectively. The Hungarian
forint <EURHUF=> rose 1.2 percent ahead of a central bank
decision later in the day, with rates expected to be on hold.
But Russia and Ukraine -- whose foreign reserves have
haemorrhaged as they tried to support their currencies -- saw
their units slip, with Ukraine's hrvynia <UAH=> down nearly 7
percent.
Ukraine promised the International Monetary Fund it would
allow greater currency flexibility and reduce the difference
between the currency market and official rates as part of a deal
to give it a $16.4 billion standby loan.
Russia allowed its rouble to depreciate by 1 percent against
its euro-dollar basket on Monday in what analysts see as a
gradual depreciation policy as it is pressured by low oil
prices, fleeing investors and ordinary Russians shifting
investments to foreign exchange. []
"The central bank has entered a phase of gradual
devaluations," said Commerzbank analyst Ulrich Leuchtmann in
Frankfurt.
"Today is not the last step, the central bank will try to do
it as slowly as possible but it's restricted by the fact that
... they are running out of ammunition to defend the rouble."
Romania became the latest emerging country to turn to an
external multilateral lender on Monday, signing a loan contract
with the European Investment Bank for one billion euros ($1.26
billion) aimed at co-financing European Union projects.
[]
(Additional reporting by Sebastian Tong; Editing by Ruth
Pitchford)
