EMERGING MARKETS-EM currencies, stock inch up in holiday-thinned moves

By Purvi Agarwal

Feb 18 (Reuters) - MSCI's indexes tracking emerging market currencies and stocks inched higher on Wednesday in a holiday-thinned week, while bonds in Ukraine declined as hopes of a ceasefire showed signs of fading.

MSCI's index tracking global EM currencies .MIEM00000CUS was up 0.1%, while the stocks gauge .MSCIEF was 0.3% higher.

EM assets have extended their stellar rally from 2025, with Asian stocks benefiting from an insatiable appetite for AI and commodity-heavy Latin American and South African markets capitalizing on the frenzy in metal markets.

The global EM stocks index marked a weekly loss in early February, its only one so far this year, as AI-led disruption fears temporarily dampened appetite and precious metal prices saw wild swings.

Meanwhile, Ukraine and Russia began a second day of talks in Geneva, Russia's RIA state news agency reported. The talks come a day after Ukrainian President Volodymyr Zelenskiy said the U.S. was putting undue pressure on him.

International bonds in Ukraine broadly slipped over 1 cent on the dollar, with the one maturing in 2035 XS2895056369=TE down 1.9 cents, as fading hopes of a ceasefire weighed on sentiment.

"The Geneva negotiations are unlikely to result in a breakthrough, and we view this as a good profit-taking opportunity," said Nikola Apostolov, an analyst at Citigroup.

"There is still a significant divide among the Russian, Ukrainian, and U.S. positions on the key issues.... This is likely to prevent a near-term resolution of the deal."

In South Africa, the rand ZAR= was up 0.3% against the U.S. dollar. Data showed headline consumer inflation slowed to 3.5% year-on-year in January.

Local stocks .JTOPI gained 1.8%, set for their biggest one-day jump in more than three weeks, supported by an uptick in precious metal prices - key exports from the resource-rich country.

In emerging Europe, most currencies were subdued against the euro. Romania's leu EURRON= was flat after hitting a two-week low on Tuesday before its central bank held benchmark rates at 6.50%, as expected.

Hungary's forint EURHUF= depreciated 0.6%, after two sessions of gains.

Stocks in Hungary .BUX and Romania .BETI gained 2% and 0.8% respectively, while Polish equities .WIG20 were 1.2% higher.

Elsewhere in EMs, Senegal expects to make its hefty March Eurobond payments on time, two sources familiar with the matter told Reuters on Tuesday.

"The big debate is whether this is sustainable, and whether the IMF will give Senegal a chance to prove it can tighten the budget enough to make the debt pile appear manageable," said Charlie Robertson, FIM Partners' head of macro strategy.

Investors said that Suriname was reopening its 2035 bond at 8.5% to raise up to $300 million, with a $1.05 billion already outstanding, in the latest evidence of the EM rally strength.

Trading on Tuesday was thinner as most Asian markets, including mainland China, Hong Kong, Singapore and South Korea were closed for the Lunar New Year holidays.

HIGHLIGHTS:

Thai industrial sentiment rises in January, baht remains a concern

Bank Indonesia to hold rates steady at 4.75% on rupiah currency concerns: Poll

Kenya's government announces tender offer for two Eurobonds worth $2.2 billion

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