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(Updates after rate decisions, adds India, Nigeria)
By Carolyn Cohn and Philip Baillie
LONDON, July 23 (Reuters) - The lira steadied below one-month highs on Tuesday after a relatively modest interest rate hike by Turkey's central bank, while the Hungarian forint hit four-week lows after a rate cut and the promise of more to come.
Turkey's central bank has been acting in recent weeks to shore up the currency, whch has fallen on global fears about the withdrawal of U.S. stimulus and by domestic political tensions.
In contrast, Hungary is easing policy to boost a sluggish economy.
Turkey's central bank raised its overnight lending rate by 75 basis points to 7.25 percent, where many analysts had expected a 100 bps rise.
"As long as global risk sentiment remains intact, the current rate hike might be enough to stabilise financial markets at current rates," BNP Paribas analysts said in a client note, adding that a winding down of the U.S. Federal Reserve's stimulus programme towards the end of the year might make a further Turkish rate hike necessary.
The lira hit one-month highs shortly before the rate rise, before trimming gains to trade flat on the day.
Turkish stocks, which had been rallying on expectations of a rate hike to support the lira, took back earlier gains and were down 0.25 percent on the day.
The forint hit four-week lows against the euro after Hungary's central bank cut interest rates for the 12th successive time, to 4 percent, and governor Gyorgy Matolcsy said in his first post-meeting news conference the rate-cutting cycle would continue.
Hungarian stocks fell 0.5 percent towards three-month lows set last week, though shares in bank OTP edged up. OTP shares fell sharply in recent days after the bank's chief executive sold nearly all his shares following the announcement of government plans to change the terms of private foreign currency loans, a move likely to lead to bank losses.
Both Hungary and Turkey have rattled the markets in the past couple of years with unconventional government and central bank measures. Investors' initial uncertainty has largely given way to enthusiasm, however, although Turkey saw a dramatic sell-off in recent weeks following anti-government protests.
The rupee inched up after India's central bank, which like Turkey is trying to pull its currency off record lows, announced fresh steps to tighten liquidity.
In Nigeria, the naira hit an eight-day low after the central bank left rates unchanged at 12 percent but hiked banks' cash reserve requirement for public sector deposits to 50 percent from 12 percent to support the currency.
Broad emerging stocks rallied 1.5 percent to six-week highs following strong gains in Chinese shares , and emerging sovereign debt spreads tightened by 3 basis points to 318 bps over U.S. Treasuries.
Emerging shares have risen 9 percent in the past four weeks, helped by more cautious comments from U.S. Federal Reserve Chairman Ben Bernanke about the withdrawal of monetary stimulus, but the shares remain 8.5 percent down on the year.