* Emerging debt, equities scale back from last week's lows
* Safe-haven Czech crown dips from recent record high
* Turkish lira firm after GDP data, political jitters remain
* Serbian dinar at highest vs euro in nearly 6 months
By Carolyn Cohn
LONDON, June 30 (Reuters) - Emerging sovereign debt spreads
backed away from the key 300 basis points over U.S. Treasuries
level on Monday and equities steadied as investors tiptoed back
into risky assets, while the safe haven Czech crown fell.
Oil continued to rise, hitting a record high at $143 a
barrel, and the dollar hit one-month lows against a basket of
currencies.
But investors squared positions in emerging markets as the
first half drew to a close.
"There is a bit more confidence and risk is being put back
on," said Carlin Doyle, emerging markets strategist at State
Street.
"Oil is still at record highs and inflation is not abating,
but people realise that emerging market countries are no longer
basket cases, and they offer a little bit of yield."
Emerging sovereign debt spreads tightened by 3 basis points
to 293 bps over U.S. Treasuries <11EMJ> on the JPMorgan EMBI+
index, after approaching the psychologically key 300 bp level on
Friday on global inflation worries.
The index has widened by 50 bps since mid-June, pressured by
increasing risk aversion and heavy supply of new international
bonds.
Benchmark emerging equities <.MSCIEF> were steady at
1,083.77, after hitting 3-month lows of 1,080.29 on Friday.
CZECH HURT
The Czech crown dropped half a percent against the euro
<EURCZK=>, after hitting record highs on Friday, while the
higher-yielding, risk-sensitive Hungarian forint <EURHUF=> rose.
"When people start buying the forint, they start selling the
low-yielding Czech crown," said Doyle.
The rand also hit a three-week high against the dollar
<ZAR=>, and the Slovak crown hit a one-month high against the
euro at 30.152 <EURSKK=>.
Slovakia's Prime Minister Robert Fico said at the weekend he
wanted a stronger conversion rate for euro adoption than the
current 30.126 ERM-2 parity level.
Lucy Bethell, FX analyst at RBS Financial Markets, said the
government's push for a strong conversion rate, which is due to
be set at an EU meeting on July 8, will unlikely be enough to
contain the expected jump in prices once the country swaps
crowns for euros in January.
"I am not sure that extra 1 to 2 percent will make a huge
difference on inflation," she said.
The Turkish lira <TRY=> rose 0.38 percent from the U.S.
close after data showing growth at a higher than expected 6.6
percent year-on-year in the first quarter.
But stocks <> hit their lowest levels in nearly two
years and yields on the 30-year benchmark dollar bond
<TRGLB30=RR> hit their highest levels for the same period on
expectations of rate rises and political worries.
The Constitutional Court holds hearings this week in a case
brought by a prosecutor seeking to outlaw the ruling AK party
for anti-secular activities. The court is expected to announce
its verdict in early August.
"The uncertain outlook for political stability pending the
outcome of the AKP closure case is likely to keep markets
on edge for some time," Citi equities analyst Andrew Howell said
in a client note. Citi said on Monday it moved its call on
Turkey to underweight from neutral.
The Serbian dinar hit its highest levels since January
against the euro <EURRSD=>, with dealers in Belgrade citing
ample euro liquidity and the perception that a pro-Western
cabinet, to be sworn in this week, would end months of political
instability.
Serbian inflation rose in June to 12.1 percent year-on-year
from 11.6 percent in May, data on Monday showed.
(Additional reporting by Jason Hovet and Gordana Filipovic)
