EMERGING MARKETS-EM assets pause as investors assess risk after Fed cut

By Pranav Kashyap

Sept 18 (Reuters) - Emerging market assets stumbled on Thursday, caught in the crosswinds of a cautious Federal Reserve rate cut, as investors assessed bets amid the central bank's tempered tone on future policy moves.

EM assets hit the brakes after a steady rally, as the Fed's 25-basis-point rate cut came with a dose of caution. A key EM equities gauge .MSCEIF slipped 0.2% after gaining for nine straight days in the run-up to the decision, while a similar index for currencies .MIEM00000CUS retreated after rising in eight of the last nine sessions.

The pullback followed Fed Chair Jerome Powell's signal that the cut was a risk-management move - not the start of an aggressive easing cycle - leaving investors guessing on the pace of future action. Even gold struggled for direction.

"You're having a bit of a consolidation in financial markets following the FOMC meeting," said Elias Haddad, senior markets strategist at Brown Brothers Harriman.

"Generally speaking, risk sentiment is good because a cut will further fuel the rally, but the fact that it's a neutral cut and not a dovish cut limits the exuberance in risk assets."

Still, the Fed's move gave some breathing room for other EM central banks to ease. Saudi Arabia, the UAE, Qatar, Bahrain, Kuwait, Oman, and Hong Kong all delivered 25-basis-point cuts.

Meanwhile, China and Brazil held rates steady.

South Africa's central bank decision was due later in the day. The rand ZAR= slipped 0.2%, while stocks in Johannesburg .JTOPI fell 0.4%, with expectations the central bank will keep rates on hold at 7%.

The Russian rouble RUB= was one of the currencies to have sizable moves on the day, jumping 1% against the dollar.

The Russian government was considering raising the rate of value-added tax to keep the budget deficit in check and maintain reserves, four sources told Reuters.

Chinese semiconductor stocks .CSI990001, .CSI931865 surged, with the Shanghai Composite .SSEC flirting with its highest level since August 2015. Huawei broke its silence on AI ambitions. The tech giant said it will launch four new versions of its Ascend AI chip over the next three years - marking its boldest move yet to challenge Nvidia's NVDA.O dominance.

Stocks in central and eastern Europe edged up, but traded in tight ranges. Hungary's .BUX rose 0.8%, after falling for four sessions.

Ukraine's international dollar bonds rose nearly 1 cent. The country was due to receive missiles for Patriot air defence systems and HIMARS rocket launchers in the first batch of weapons being sent under a new funding programme agreed by the U.S. and Kyiv's European allies.

Turkish stocks .XU100 hit an over two-week high, gaining for three out of four sessions. On Monday, Turkish assets collectively rose after a court adjourned a ruling on ousting the country's main opposition party's leader.