EMERGING MARKETS-EM stocks stable after Friday's selloff; Hungary rate verdict eyed

By Nikhil Sharma

Nov 17 (Reuters) - Emerging Market stocks steadied on Monday after the previous session's selloff as investors awaited the release of delayed U.S. economic data, while the Hungarian forint was subdued ahead of the country's interest rate decision later this week.

A broad gauge of emerging-market stocks, the MSCI Emerging Markets Index .MSCIEF rose 0.2% after sliding 1.7% on Friday - its worst single-day drop since April 7, following U.S. tariff announcements.

The decline came as hawkish statements from U.S. Federal Reserve officials diminished expectations for a December rate cut, erasing equity gains accumulated in the run-up to the end of the historic U.S. government shutdown on Wednesday.

An index tracking EM currencies .MIEM00000CUS traded with caution, while the U.S. dollar held firm ahead of the release of post-shutdown economic data that could offer investors more clarity on the Fed's policy decision in December. All eyes will be on the closely watched September nonfarm payrolls report due on Thursday.

"What my expectations are (from the data) is that we will have this lack of direction that will generate some two-sided moves until more clarity," said Ipek Ozkardeskaya, senior market analyst at Swissquote Bank.

In Central-Eastern Europe, attention centered on Hungary's interest rate verdict on Tuesday, when the central bank is widely expected to leave its base rate at the European Union's joint-highest level of 6.5%.

"The market will focus on forward guidance, especially after the increase in the planned public deficit. While hawkish guidance is widely expected, there is not much possibility of a tougher tone compared to previous meetings, building some dovish risk," analysts at ING said in a note.

The move would reflect growing concerns among policymakers about higher fiscal spending in the run-up to parliamentary elections next year and an uncertain inflation outlook.

Last week, the government raised its budget deficit targets to 5% for this year and next, which prompted traders to dump long-dated government bonds and reduce exposure to the local currency.

The Hungarian forint EURHUF= was subdued after declining about 0.5% last week. S&P Global had warned earlier this month that a sharp rise in budget deficit and inflation could threaten Hungary's credit rating.

Budapest stocks .BUX rose 0.2% on the day. Warsaw's main stock index .WIG20 slipped 0.5%, pressured by state-owned utility firm PGE PGE.WA, which fell 4.6% after reporting preliminary third-quarter results.

The Polish zloty EURPLN= was flat after briefly surpassing a seven-month high. The National Bank of Poland (NBP) will release data on core inflation for October later at 1300 GMT, amid expectations that inflation to have slowed to 3.0% from 3.2% in September.

The Czech koruna EURCZK= was flat, while Prague's main stock index .PX was closed for Freedom and Democracy Day.

Elsewhere in EM, the South African rand and international bonds remained stable, showing tepid moves despite S&P Global's first credit upgrade of the country since 2005 - a move to "BB" from "BB-", with a positive outlook.

Meanwhile, the International Monetary Fund mission began policy discussions with Ukrainian officials on a new Extended Fund Facility programme, with an objective to strengthen governance, combat corruption, and enhance growth.

In Chile, governing coalition candidate Jeannette took a narrow lead in the first round of the presidential vote on Sunday, but is seen losing to far-right candidate Jose Antonio Kast in a runoff next month, mirroring recent right-wing victories across Latin America, where crime remains a key issue.

Kast's potential win would put in place an administration that is further to the right than any other since the Pinochet dictatorship. Chile dollar bonds were mixed on Monday.

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