* Emerging shares <.MSCIEF> rise on bank rescue plans
* Hungary's forint, shares up on IMF offer
* Russian shares buck trend to fall over 5 pct
* 5-year CDS on Ukraine, Russia rise
By Sebastian Tong
LONDON, Oct 13 (Reuters) - Emerging shares and currencies
rose on Monday after bank rescue plans unveiled by policymakers
around the world offered a glimmer of hope for an end to the
financial crisis that has sparked the collapse of banks from
Wall Street to Reykjavik.
But worries over emerging European economies persisted with
Hungary saying it may turn to the International Monetary Fund
(IMF) for assistance to avert a financial meltdown.
Global markets rallied after weekend meetings of the Group
of 20 nations along with the IMF and World Bank in Washington
saw leaders pledging to use public funds to help keep financial
institutions solvent.
Britain injected some $64 billion to buy into leading UK
banks and called on its European and U.S. allies to take similar
steps to shore up the global banking system and free up
paralyzed money markets.
"People are a bit reassured by policymaker statements over
the weekend. But we are still looking at further deleveraging
for the emerging markets and a global economic downturn or
recession," said Jon Harrison, emerging foreign exchange
strategist at Dresdner Kleinwort.
After a punishing week that saw it lose over 17 percent, the
emerging stocks benchmark <.MSCIEF> rebounded from three year
lows to rise 3.58 percent to 613.07 by 1100 GMT.
Russian stocks were among the notable exceptions with its
key dollar-denominated RTS Index <> falling over 5 percent
after being suspended all day on Friday.
The country's rouble-denominated MICEX Index <> was
nearly 4 percent down before trading was suspended.
Bellwether emerging currencies the Turkish lira <TRY=> and
the South African rand <ZAR=> were among the strongest currency
gainers, rising about 2 percent to the dollar.
Hungarian stocks <> were among the strongest gainers,
rising 6.38 percent while the country's forint currency
<EURHUF=> rose nearly 1 percent versus the euro to recover after
a heavy bout of selling last week.
The IMF's offer of technical and financial aid to Hungary
helped prop up sentiment in the country which has been hard hit
by the financial crisis due to its heavy reliance on external
financing and large current account deficit. []
But Hungary's prime minister said the IMF offer was mostly
symbolic and that country would turn to the IMF only as a last
resort. []
ASSURANCES
Iceland's deepening financial crisis has left policymakers
jittery about the state of their banks. Central banks in
emerging Europe emulated their larger global peers, stepping up
efforts to ease concerns over their banks.
Poland's central bank governor said the country's banking
sector had sufficient liquidity and pledged to help lenders if
necessary [] while Ukraine's central bank ordered
domestic banks to stick to time limits for loan and credit
redemptions to stabilise the banking system. []
Russia's finance minister called on the IMF to draw on its
reserves to help smaller developing economies which were now
feeling the impact on the credit crisis sweeping the globe.
[]
Credit growth in Russia is still expected to fall despite
measures by the authorities there to inject liquidity, said Citi
in a recent note.
"Until the necessary legislative changes are made, which we
think could take one-to-two weeks, liquidity strapped banks
still do not have access to emergency funding," Citi said.
Liquidity in dollar-denominated emerging sovereign bonds
<11EMJ> was thin due to a U.S. bank holiday but spreads were
quoted some 47 basis points wider to 649 bps over U.S.
Treasuries.
The level of stress on credit markets was also reflected in
the cost of insuring the sovereign debt of Russia and Ukraine.
Five-year credit default swaps (CDS) for Russia were quoted 50
bps higher and Ukraine 100 bps higher.
"There is a lack of demand on the buy-side as the situation
on the credit side is still critical. This won't change until we
see the end of the unwinding of riskier positions and banks
start lending again," said Luis Costa, emerging markets debt
strategist at Commerzbank.
(Additional reporting by Peter Apps; Editing by Toby Chopra)
