EMERGING MARKETS-EM assets steady after strong gains as geopolitical worries subside

By Twesha Dikshit and Ragini Mathur

Jan 15(Reuters) - Emerging market assets were steady on Thursday, with investors taking a breather after a strong start to the year, while gold and oil prices retreated on softening geopolitical rhetoric from U.S. President Donald Trump.

The MSCI emerging markets stock index .MSCIEF edged down 0.1% after posting back-to-back record peaks in the previous two sessions. A similar gauge for currencies .MIEM00000CUS rose 0.3%.

Trump said he had been told that killings in Iran's crackdown on nationwide protests were subsiding, even as tensions between the two nations remained high.

Emerging market stocks have seen solid demand this month with ING analysts saying the iShares Core MSCI EM index IEMG.K had its single largest inflow last week since 2021.

"Investors continue to look for opportunities outside the U.S., with seemingly strong flows into EM equities at the start of the year. This all makes for a choppy FX story," the analysts said in a note.

JPMorgan data showed year-to-date inflows for EM equity ETF had already surpassed $5 billion, as of Tuesday.

Developing geopolitical risks in Venezuela, Iran and Greenland, along with a weaker dollar and soaring precious metal prices and a shift away from pricey U.S. tech sector, have contributed to investor appetite for EM assets.

Trump also dialled down his attacks on Federal Reserve chair Jerome Powell, telling Reuters he had no plans to fire him despite a Justice Department criminal investigation.

DOMESTIC DATA INDICATORS WATCHED

The Czech Republic's November adjusted retail sales rose 4.6% year-on-year, higher than forecasts of 3.4%. The crown EURCZK= was flat against the euro, while stocks .PX were up 0.3%.

Hungary's final industrial output number dropped 5.4% in November from the previous year. Both the forint EURHUF= and the benchmark index .BUX were muted.

Poland's stock index .WIG20 gained 0.5%, while the zloty EURPLN= was little changed. Inflation came in at 2.4% in December, confirming flash estimates and reinforcing expectations of further rate easing.

The central bank kept rates steady on Wednesday, in line with expectations, adopting a wait-and-see approach to assess a decline in inflation.

Elsewhere, Mozambique's sole international dollar bond fell after President Daniel Chapo told Bloomberg Television the country could embark on debt renegotiation after clinching a new deal with the International Monetary Fund.

The 2031 bond XS2051203862=TE shed 1.4 cents to bid at 84.12 cents on the dollar, Tradeweb data showed.

In Asia, South Korea's benchmark index .KS11 ended at a record high, up 1.6%, after the Bank of Korea held interest rates steady, signalling an end to its easing cycle.

Indexes in the Philippines .PSI and Thailand .SETI gained 1.5% and 1.3%, respectively.

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