EMERGING MARKETS-EM stocks set for modest gains after week of rate decisions and data

By Pranav Kashyap

Sept 19 (Reuters) - Emerging market stocks and currencies were on track for modest weekly gains as investors caught their breath after a whirlwind week packed with central bank decisions and key economic releases.

An index tracking emerging market equities .MSCIEF was on course for a nearly 1% weekly gain - its third straight advance and longest winning streak in more than four months. A similar gauge for currencies .MIEM00000CUS was also headed for a modest uptick.

On the day, they were down 0.4% and 0.2% respectively.

In Central and Eastern Europe, Polish stocks .WIG20 and the zloty EURPLN= were steady, with investors keeping an eye on Moody's credit rating review due later in the day.

Poland is grappling with ballooning spending demands, especially a rise in defence outlays following Russia's invasion of neighbouring Ukraine. The government recently raised its 2025 fiscal deficit forecast to 6.9% of GDP — more than double the EU's 3% threshold, making it the second-highest deficit in the bloc.

Rating agencies have flagged deep political polarization as a key risk to fiscal consolidation. Fitch recently revised its outlook to negative, citing concerns that entrenched divisions could derail efforts to rein in spending — a move that could pave the way for a downgrade.

"Poland's fiscal trajectory is slightly negative, but they have the EU support and still have a strong starting point from a credit perspective," Thomas Christiansen, CIO and head of EMD at UBP, said.

The Hungarian forint EURHUF= continued to hover near 16-month highs. On a broader front, an index tracking the region's equities .MIME00000PUS dropped 0.4%.

This week, investor optimism got a reality check after the Federal Reserve delivered a 25-basis-point rate cut, but paired it with a dose of caution.

The steady rally in emerging markets lost momentum as Fed Chair Jerome Powell signalled Wednesday's move was more about risk management than the start of a full-blown easing cycle — leaving investors guessing about the pace and direction of future rate cuts.

The Russian rouble RUB= was steady after President Vladimir Putin signalled on Thursday that he is open to raising certain taxes, especially on the wealthy, as the government struggles to make ends meet in the fourth year of the war in Ukraine.

Turkish equities .XU100 were on track for their best weekly performance in nearly three months, snapping a three-week losing streak — the longest in seven months.

The rebound was sparked by a court decision to delay a ruling on whether to remove the main opposition leader over alleged irregularities.

"We haven't considered Turkey to be a fully free and open democracy, so more importantly for Turkish asset prices, in our view, is the policy making. It's whether the monetary policy is making sense and there's been serious improvements on that front," Christiansen added.

Elsewhere, South Africa's rand ZAR= hovered near 10-month highs, while stocks in Johannesburg .JTOPI edged up 0.2% after the country' trade minister met U.S. Trade Representative Jamieson Greer for talks as Africa's biggest economy tries to agree a deal to roll back steep U.S. tariffs.

For TOP NEWS across emerging markets nTOPEMRG

For CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB