By Daniel Bases

NEW YORK, April 15 (Reuters) - Emerging markets turned in a
mixed performance on Wednesday as credit markets digested new
issues and awaited more to come while stocks cut their losses
in a late-day rebound.

Sovereign emerging market bond spreads over U.S. Treasuries
narrowed slightly while trading of credit default swaps,
insurance against defaults and restructurings, was limited.

One investor cited the economic stimulus plans as one
reason for a strengthening trend in credit markets.

"It certainly feels like all the initiatives from the
public sectors are starting to pay off ... Money is coming off
the sidelines for (sovereigns and blue-chips) and we are
starting to see corporates too," said AJ Mediratta, senior
managing director at Greylock Capital Management in New York.

The yield spread between emerging market sovereign bonds
and U.S. Treasuries narrowed just 2 basis points to 563 basis
points, according to the JP Morgan Emerging Markets Bond Index
Plus 11EMJ.JPMEMBIPLUS.

MSCI's broad emerging markets stock index .MSCIEF rose
just 0.06 percent, while the MSCI Latin American stock index
.MILA00000PUS dipped 0.41 percent. Both indexes are hovering
near six-month highs.

They were given a boost by a turnaround in U.S. stocks in
the last hour of trade.

U.S. economic data cast a pall over trading. U.S. consumer
prices fell in March, their first 12-month drop in nearly 54
years, as did industrial production. However the U.S. Federal
Reserve said activity in some parts of the economy appeared to
be stabilizing. [ID:nN15491736]

Mexico's currency, the peso, strengthened on this sentiment
as the country sends roughly two-thirds of its exports north.
However, the U.S. economy is still mired in a 16-month long
recession that next month will mark the longest since the Great
Depression.

The peso traded at 13.015 per U.S. dollar, up 1.03 percent
versus the Mexican central bank's final 1:30 p.m. (1830 GMT)
reference on Wednesday MXN=MEX01. The Brazilian real dipped
0.09 percent to 2.1970 against the greenback (BRBY: Quote, Profile, Research).

BRAZIL CUTS TARGET

Brazil surprised most investors on Wednesday, announcing a
larger-than-expected cut to its 2009 primary budget surplus
target, to 2.5 percent of gross domestic product from 3.8
percent. [ID:nN15516613]

Finance Minister Guido Mantega set a surplus target of 3.3
percent of GDP for the next three years, [ID:nN15516613]

"Our view is still positive on Brazil despite the lower
primary surplus target as we think lower real rates and fiscal
stimuli will aid the economy to avoid recession and post 0.5
percent - 1 percent growth this year," wrote analysts at
BullTick Capital Markets.

The budget ministry also projected economic growth of 4.5
percent in 2010 and inflation of 4.5 percent annually for 2010
through 20112

The U.S. Treasury Department declined to name China a
currency manipulator, backing down from tough talk last year
when Barack Obama, then campaigning for president, said Beijing
was keeping its currency unfairly low. [ID:nWEQ000881]

NEW ISSUES

More new debt issues are coming to the market, as credit
markets further unclog after the financial crisis effectively
shut them down.

Indonesia is looking to sell its first-ever global Islamic
bond as early as Thursday, the government said, ending the
delay from late last year at the height of the crisis. The deal
is for a five-year U.S. dollar-denominated sukuk, expected to
be as much as $500 million-$600 million. [ID:nHKG129721]

Industrial Bank of Korea (024110.KS: Quote, Profile, Research) set guidance of
525-550 basis points over midswaps, the measure of interest
between floating and fixed rates, for a five-year U.S.
dollar-denominated bond expected to be as much as $1 billion,
sources told Reuters on Wednesday. [ID:nHKG260686].

Brazilian telecommunications company Telemar Norte Leste SA
is to issue as much as $750 million worth of 10-year notes
[ID:nN14344733]. Russia's Gazprom could issue $2 billion worth
of 10-year Eurobonds. Sources said the deal, with a three-year
put option, is expected to pay a 9.25-9.5 percent coupon.
[ID:nLF508474]

"Both Telemar and Gazprom seem to be going a little
slowly," said one fund manager who asked for anonymity given
the firm does business with the various underwriters.

"Gazprom is priced pretty tightly ... Telemar I think is
being handicapped by the fact that it is doing a parallel $1
billion deal in the local market which is creating some noise
and confusion," the fund manager said.
(Editing by Dan Grebler)