* Emerging stocks edge up 0.2 pct but risk appetite wanes
* Egyptian stocks fall up to 10 pct as bourse reopens
* Turkish 2-yr bond yields fall ahead of rate meeting
By Caroline Copley
LONDON, March 23 (Reuters) - Uncertainty about Japan's
nuclear crisis and Middle East turmoil capped gains in emerging
equities on Wednesday, while Egyptian shares fell 9 percent
after the stockmarket opened for the first time in seven weeks.
MSCI's benchmark emerging equities index <.MSCIEF> was up
0.2 percent by 1055 GMT, supported by gains in Turkish shares
ahead of a rate meeting and Russian shares which are benefiting
from high oil prices. Shares in emerging Europe <.TRXFLDEEPU>
were flat. Emerging sovereign debt <11EMJ> fell 1 basis point to
trade 271 bps over U.S. treasuries.
"We are zigzagging between nuclear news in Japan and
bombings in Libya -- this is not a good environment to make
decisions about allocation and ... about markets risk appetite,"
said Lars Christensen, chief emerging markets analyst at Danske
bank.
"The overall global growth story has been dented and while
we are bullish on the emerging markets story, oil will be an
issue for many countries. The big worry is China where recent
manufacturing data has been slightly disappointing," he said.
Shares on Egypt's stock exchange <.EGX30> closed down 8.95
percent after trading resumed for the first time in more than
seven weeks following political turmoil after the ousting of
President Hosni Mubarak.
The Egyptian pound <EGP=> fell to a six-week low and
Egyptian global depository receipts traded in London <OCICq.L>
<HRHOq.L> also slipped.
"I think the majority of people are expecting the market to
be down. There are a number of technical issues, a number of
forced sellers and non-dedicated funds that may have decided
they don't want to be there," said Andrew Brudenell, portfolio
manager at HSBC Global Asset Management.
"We have a positive long-term view and there is an awful lot
that needs to happen. We will act based on price and liquidity."
TURKEY RATES IN FOCUS
The yield on Turkey's Nov. 7, 2012 benchmark bond
<0#TRTSYSUM=IS> dipped to 8.61 percent, from 8.63 percent on
Tuesday, ahead of an interest rate decision, with the central
bank widely expected to keep interest rates and reserve
requirements on hold despite strong loan growth.
Those expectations boosted Turkish banking stocks <.XBANK>,
which rose 0.6 percent on Wednesday to a one-week high,
outperforming Istanbul's ISE 100 index <>, which was up
0.3 percent.
"(Central bank determination to curb loan growth) made us
uneasy about Turkish equities. We find non-banks not cheap, and
banks' margins likely to contract by 30 to 50bps ... with sector
earnings flat to down 13 pct," Morgan Stanley said in a note.
But Morgan Stanley noted that Turkish stocks trade at a 15
percent discount to Europe, Middle East and Africa 12-month
forward price-earnings ratios.
Expectations for rate rises in the longer term were
supported by a central bank survey that showed business leaders
and economists expect inflation at the end of 2011 to be higher
than previously thought. []
That pushed yields on Turkey's 10-year bond <TR10YT=RR> up
to 9.620 percent from 9.370 percent on Tuesday. The lira <TRY=>
was little changed against the dollar.
In South Africa, data showed February inflation in line with
expectations at 3.7 percent and comfortably within the central
bank's target range of 3-6 percent.
However, analysts said the country's rising oil bill would
put pressure on the central bank to adopt a more hawkish tone at
Thursday's rate-setting meeting.
"Inflation is well behaved for now, the rand is firm, and a
negative output gap persists. All of these are good reasons to
keep interest rates unchanged," Standard Chartered analysts said
in a note.
"However, with higher oil prices, the inflation outlook over
the forecast horizon is flashing red."
The rand <ZAR=> retreated against the dollar and yields on
South Africa's 2015 <ZAR157=> and 2026 <ZAR186=> notes fell.
Elsewhere, currencies in emerging Europe were mixed.
The Polish zloty <EURPLN=> dipped for the third day in a
row, while the Hungarian forint firmed 0.3 percent to a six-week
high, as investors revised expectations on interest rates,
viewing the central bank's new monetary council was now unlikely
to start cutting interest rates.
(Additional reporting by Sujata Rao; Editing by Susan Fenton)
