EMERGING MARKETS-EM assets steady; Ukraine's GDP warrants surge after restructuring plan

By Twesha Dikshit

Dec 2 (Reuters) - Emerging market equities ticked up slightly on Tuesday with investors continuing to monitor efforts to end the Ukraine and Russian war, while Ukraine's GDP warrants surged after the government announced a formal fixed income instruments restructuring plan.

The MSCI index of emerging market equities .MSCIEF inched up 0.3%, while a corresponding currencies gauge .MIEM00000CUS was steady.

U.S. President Donald Trump's special envoy, Steve Witkoff and son-in-law Jared Kushner were set to meet President Vladimir Putin to discuss a possible way to end the deadliest European conflict since World War Two.

Meanwhile, Ukraine launched an offer to investors to swap $3.2 billion of complex and costly GDP warrants for international bonds on Monday, in a bid to emerge from sovereign default. The news sent the warrant XS1303929894=TE more than 4 cent higher on Tuesday to 97.4 cents on the dollar, their highest level in over four years, according to Tradeweb data.

Renewed attempts to end the Russian war in Ukraine have bolstered emerging markets with equities ending last week up over 2%, following a sharp tech-led selloff in mid-November that dampened global sentiment and sent shares plunging.

Still, doubts remain on what a potential peace deal could look like and who might emerge as a winner in the negotiations.

"Developments in the Russia-Ukraine peace talks remain the most relevant topic... as U.S. Special Envoy Steve Witkoff meets with President Putin today, we should gain a clearer sense of how close we are to any agreement," ING analysts said in a note.

"The market is still pessimistic about progress in the negotiations, and a possible agreement would provide a boost to FX across the CEE region."

CENTRAL BANK UPDATES TAKE THE SPOTLIGHT

The Turkish Central Bank said it had decided to take simplification steps regarding reserve requirement regulations, revising FX reserve requirement ratios. The lira TRY= was flat against the dollar while equities .XU100 edged up 0.2%.

The country's 5-year credit default swap TRGV5YUSAC=MG dropped to 232 bps, lowest since May 2018, according to S&P Global Market Intelligence.

The National Bank of Poland is widely expected to lower interest rate by 25 bps to 4% on Wednesday with inflation data showing the November rate fell within the central bank's target range, while wage growth rates were slower than expected. The zloty EURPLN= slackened 0.3% against the euro.

Poland's WIG20 Index .WIG dropped 1.3%. Polish shares of Santander Bank SPL1.WA were down 5.8% after the Spanish lender sold a stake in its Polish subsidiary through an accelerated bookbuild. Allegro ALEP.WA shares fell 3.2% after shareholders sold shares of the country's largest e-commerce company.

Czech equities .PX rose 0.5% while the krona EURCZK= ticked down. The central bank's most likely outcome at the final policy meeting of the year is to keep rates stable, Governor Ales Michi told news website Novinky.cz.

Over in Asia, South Korea's KOSPI Index .KS11 jumped 1.9% after the U.S. Commerce Secretary confirmed Washington would lower the general tariff rate on imports from South Korea to 15%, retroactive to November 1.

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For CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB