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EMERGING MARKETS-Emerging stocks reel from Fed, weaker dollar lifts FX
December 19, 2016 / 10:25 AM / 7 months ago

EMERGING MARKETS-Emerging stocks reel from Fed, weaker dollar lifts FX

LONDON, Dec 19 (Reuters) - Emerging market currencies gained ground against a weaker dollar while stocks hit a two-week low, still feeling the impact of last week's Federal Reserve meeting.

Ukrainian dollar-bonds soared after the country moved to privatise its biggest lender.

MSCI's emerging market index weakened 0.3 percent in its fourth straight day in the red with many Asian bourses racking up losses of 1 percent or more.

Emerging assets have been hit in recent days by the prospect of U.S. rates rising faster than expected and a stronger dollar, driven by expectations that U.S. President-elect Donald Trump's planned fiscal spending and tax cuts will fuel economic growth and inflation.

The dollar dropped further from recent 14-year highs, sending major emerging currencies higher, with South Africa's rand strengthening 0.8 percent following three sessions of losses while Turkey's lira edged 0.1 percent higher on a third consecutive day of gains.

Russia's rouble gained 0.6 percent, tracking higher oil prices .

Ukraine's dollar-denominated bonds jumped by around 1 cent after Kiev said it would privatise the country's biggest lender, PrivatBank.

"It seemed quite clear for some time that the government had to do something, so this probably comes as a relief, especially if we see positive comments from the IMF (International Monetary Fund)," said Simon Quijano-Evans, emerging markets strategist at Legal & General Investment Management.

"However, multi-month, markets will be focused on how much capital is required from the state and how much can be obtained from the original owners in order to reduce the fiscal burden."

In Poland, a political standoff continued for a fourth day with opposition lawmakers accusing the ruling Law and Justice (PiS) party of undermining democracy and the constitution following a proposal to restrict media's access to parliament.

"The latest events are a signal that political risk in Poland continues to rise," said Piotr Matys, EM FX strategist, Rabobank.

"This is to some extent reflected in the fact that the zloty is the weakest performing currency amongst its CEE peers so far this year. It will remain one of the most vulnerable currencies to external developments."

The zloty, unchanged on the day, has weakened 3.5 percent against the euro since the start of the year. Warsaw's stock index, up 2.5 percent since the start of the year, slipped 0.6 percent. Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg

on year

Morgan Stanley Emrg Mkt Indx 853.28 -3.12 -0.36 +7.45

Czech Rep 916.57 -1.02 -0.11 -4.16

Poland 1906.03 -12.51 -0.65 +2.52

Hungary 31750.46 -125.80 -0.39 +32.73

Romania 7059.71 +2.92 +0.04 +0.79

Greece 628.10 -11.54 -1.80 -0.51

Russia 1136.81 +1.25 +0.11 +50.17

South Africa 43558.96 +393.70 +0.91 -4.89

Turkey 77690.18 +100.54 +0.13 +8.31

China 3118.43 -4.56 -0.15 -11.89

India 26346.71 -142.85 -0.54 +0.88

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2016

Czech Rep 27.00 27.01 +0.04 -0.02

Poland 4.41 4.42 +0.09 -3.50

Hungary 311.90 312.12 +0.07 +0.88

Romania 4.51 4.51 +0.01 +0.22

Serbia 123.44 123.52 +0.06 -1.60

Russia 61.76 62.04 +0.46 +18.12

Kazakhstan 335.12 335.12 +0.00 +1.61

Ukraine 26.27 26.21 -0.23 -8.82

South Africa 14.01 14.08 +0.44 +10.33

Kenya 102.13 102.10 -0.03 +0.07

Israel 3.87 3.87 +0.13 +0.54

Turkey 3.50 3.51 +0.27 -16.58

China 6.95 6.96 +0.16 -6.53

India 67.78 67.85 +0.10 -2.33

Brazil 3.39 3.39 +0.00 +16.74

Mexico 20.46 20.43 -0.17 -16.09

Debt Index Strip Spd Chg %Rtn Index

Sov'gn Debt EMBIG 367 1 .04 7 31.26 1

All data taken from Reuters at 10:07 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT.

For GRAPHIC on emerging market FX performance 2016, see tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2016, see tmsnrt.rs/2dZbdP5

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see ) (Additional reporting by Claire Milhench; editing by John Stonestreet)

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