* Russian, South African stocks hit 2-1/2 years
* Emerging stocks edge up, debt spreads widen slightly
* Egypt London-listed GDRs fall, CDS rise
LONDON, Feb 3 (Reuters) - Russian and South African stocks
hit their highest in 2-1/2 years on Thursday, boosted by strong
oil and metal prices, while investors paid more to insure
against Egyptian debt default as protests in Egypt escalated.
Emerging equities edged up overall, but gains were capped by
concerns over tension in Egypt and other Middle Eastern
countries.
"Markets had an initial move on worries over Egypt and
contagion, now we are waiting to see what else happens," said
Roderick Ngotho, CEEMEA FX strategist at RBS.
"Oil is supporting the Russian rouble."
Inflationary worries also persisted. Food prices hit a
record high, data from the UN's food agency showed, reminding
investors that rising prices have led to higher interest rates
in some emerging market countries, and political tension in
others.
The MSCI emerging equities index <.MSCIEF> inched up 0.15
percent, but is lagging global stocks <.MIWD00000PUS>, which
have been hitting 2-1/2 year highs. The Thomson Reuters emerging
Europe index <.TRXFLDEEPU> was steady.
Chinese markets were shut for New Year holidays.
Emerging sovereign debt spreads widened by 2 basis points to
253 bps over U.S. Treasuries <11EMJ>.
Violent clashes in Egypt drove oil above $103 due to worries
about supply disruption, and copper prices rose to $10,000,
helped by expectations of a global recovery.
Higher energy and commodity prices support emerging market
commodity producers.
Russian stocks <> hit their highest since Aug 2008, and
South African stocks <.JTOPI> rose to their strongest since June
2008.
The rouble <RUB=> hit nine-month highs against the dollar
and the Kazakh tenge <KZT=> hit its highest in more than six
months.
Egyptian London-listed global depositary receipts (GDR)
<0#.EGGDR> fell and five-year credit default swaps rose after
supporters of President Hosni Mubarak killed at least five
anti-government protestors in Cairo, crushing hopes of a
peaceful resolution to the political crisis.
The Egyptian stock exchange has been closed since last week
and remains closed until Sunday, with banks also shut.
"If markets re-open as planned, we expect to see a
broad-based sell-off in Egyptian assets and a surge higher in
dollar/Egyptian pound NDFs (non-deliverable forwards)," said BNP
Paribas in a client note.
Egypt's 5-year CDS rose 12 bps to 400 bps, according to
Markit, though remain below near-two-year highs of 450 bps hit
early this week.
Other Middle Eastern debt insurance costs also rose, with
Bahrain CDS gaining 14 bps to 238 bps, their highest since Sept
2009, and Lebanon CDS rising 24 bps to 400 bps.
FORINT RALLY
The forint hit a nine-month high against the euro <EURHUF=>
on recent rate hikes and hopes for fiscal reform.
Prime Minister Viktor Orban's government is working on a
three-year 600-650 billion forint ($3.1-$3.3 billion) fiscal
adjustment programme to be unveiled later this month, which
markets hope will make the budget sustainable beyond 2012, when
big one-off taxes expire.
Other emerging European currencies weakened.
The Czech crown fell nearly half a percent <EURCZK=> ahead
of a central bank rate decision at 1200 GMT, expected to result
in no change to record low rates of 0.75 percent.
Romania is also expected to keep rates unchanged, at 6.25
percent. The Romanian leu <EURRON=> was steady.
The Turkish lira <TRY=> briefly tested one-week highs after
mixed Turkish inflation data. Consumer prices came in below
expectations in January, but producer prices were above
expectations.
(Editing by Ruth Pitchford)
