EMERGING MARKETS-EM currencies, stocks subdued as geopolitical tensions heighten uncertainty

By Purvi Agarwal

Feb 19 (Reuters) - Most emerging market currencies edged lower while stocks were treading water on Thursday as rising geopolitical tensions globally kept investors on edge.

MSCI's index tracking global EM currencies .MIEM00000CUS was 0.2% lower, at its lowest level in more than a week while the stocks gauge .MILA00000PUS was flat.

EM assets have been largely range-bound this week as many markets in Asia, including mainland China, Hong Kong and Taiwan, are closed for the Lunar New Year holidays.

U.S.-IRAN, RUSSIA-UKRAINE TALKS

Geopolitical tensions, that showed signs of easing last week, were back on investors' radar, with positive or negative updates likely to impact the oil market.

The White House said on Wednesday that nuclear talks with Iran were showing progress but the two countries were still far apart on some issues. Markets have not ruled out a broader military action.

"The balance of risks now tilts to a U.S. strike after market close Friday ... to say that this could be market- and geopolitics-moving is an understatement," said Michael Every, senior global strategist at Rabobank. "Oil, and presumably LNG, prices would spike."

Separately, two days of peace talks between Ukraine and Russia ended on Wednesday without a breakthrough as President Volodymyr Zelenskiy said he was dissatisfied with the outcome while Washington reported "meaningful progress".

The differences in positions held by the United States, Russia and Ukraine on key issues have led analysts to believe that a resolution was not likely in the near term.

Still, Ukraine's international bonds stabilised on Thursday after broadly shedding over 1 cent on the dollar each in the previous session.

The dollar index =USD was briefly supported after minutes from the Federal Reserve's latest meeting showed that policymakers were not in a rush to trim interest rates, but was last down 0.1%.

In South Africa, the rand ZAR= slipped 0.6%, set for its fourth session of declines. Local stocks .JTOPI edged 0.4% lower, as gains in broader stocks only limited declines in precious metal miners despite an uptick in metal prices.

Turkey's lira TRYTOM=D3 was little changed while its stocks .XU100 were 1.7% lower.

Most currencies in emerging Europe were muted against the euro. Stocks in Romania .BETI and Poland .WIG20 climbed 0.4% and 0.3% respectively, while ones in Hungary .BUX slipped 0.5%.

Elsewhere in EMs, South Korean stocks .KSP11 jumped over 3% to close at a record high, boosted by tech shares tracking overnight gains on Wall Street.

The Philippine's central bank delivered a 25-basis-point cut while Indonesia's kept interest rates on hold. Currencies in both countries were little changed after the widely expected decisions.

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