EMERGING MARKETS-EM assets rebound on Ukraine peace deal hopes, rising US rate-cut bets

By Purvi Agarwal

Nov 24 (Reuters) - stMost emerging market stocks and currencies staged a recovery on Monday due to increasing expectations of U.S. interest rate cuts, while Ukraine's international bonds rallied as peace talks progressed.

The U.S. and Ukraine were set to continue work on a plan to end the war with Russia, after agreeing to modify an earlier proposal widely seen as too favourable to Moscow.

The agreement was reached after talks in Geneva on Sunday, although no specifics were provided. European leaders are also expected to discuss plans for Ukraine on Monday.

Investors cheered the thought that a Ukraine peace deal was close, sending its international bonds nearly 3 cents higher on Monday. The one maturing in 2035 gained the most, adding 2.9 cents to bid at a three-month high of 54.75 cents on the dollar, according to Tradeweb data.

Russia's rouble RUB= strengthened 0.3% against the dollar, over-the-counter market data showed.

Ukraine-focused stocks gained on the optimism, with London-based miner Ferrexpo FXPO.L soaring 24%.

"We have been here several times before, but seems like the pressure of sanctions has Russia slightly more interested in a peace deal than usual... the mood music is cautiously optimistic," said Chris Turner, global head of markets at ING.

"We're also seeing natural gas and oil prices close to the lows of the year... this should all be welcome news for global growth prospects, should peace talks progress further."

Meanwhile, comments from influential U.S. Federal Reserve policymaker John Williams on Friday boosted expectations of U.S. rate cuts in the near term, lifting global market sentiment, which spilled into emerging markets.

The remarks come even as other Fed policymakers caution against further reductions until there is more clarity on U.S. economic health.

MSCI's indexes tracking global emerging market stocks .MSCIEF gained 0.5%, while the currency gauge .MIEM00000CUS was up 0.1%.

The indexes had logged their steepest weekly declines since April and July, respectively, amid a sharp global risk asset sell-off.

South Africa's rand ZAR= gained 0.2% but stocks .JTOPI fell 0.2%.

Late on Friday, S&P Global upgraded its ratings on Kuwait and Uzbekistan on economic reforms. It also upgraded Zambia's foreign currency rating, on "improved creditworthiness" as authorities take steps to restructure remaining commercial debt.

Bahrain's was downgraded as the ratings agency expects debt to rise against the backdrop of a softer oil market and still-wide fiscal deficits.

The World Bank lifted Kenya's economic growth forecast for this year to almost 5%, citing a pickup in the construction sector in East Africa's largest economy.

Most emerging Europe currencies were flat to higher against the euro. Hungary's forint EURHUF= was an exception, down 0.5%.

Regional stocks in Hungary .BUX and Romania .BETI jumped 0.6% each, while those in the Czech Republic .PX gained 0.7%.

Turkey's lira TRYTOM=D3 was little changed against the dollar, but stocks .XU100 fell 0.3%.

Israel's shekel ILS= weakened 0.5% ahead of a local monetary policy decision where the central bank is expected to deliver a quarter-point cut.

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