EMERGING MARKETS-EM assets steady as investors await fresh catalysts after weak Asia factory data

By Niket Nishant

Dec 1 (Reuters) - Emerging market assets were little changed at the beginning of the final month of the year, as investors held back in the absence of fresh positive cues and a slew of data pointed to slowing factory activity in Asia.

The MSCI index of emerging market equities .MSCIEF was up 0.06% on Monday, while the corresponding currencies gauge .MIEM00000CUS gained 0.04%.

Regional assets have largely traded in line with expectations for Federal Reserve rate cuts, which typically support demand for emerging market stocks and currencies.

But with much of the rate-cut optimism now reflected in prices after a string of dovish remarks from Fed officials, investors are increasingly looking for new catalysts to sustain momentum into the year-end, particularly as confidence in AI-driven tech valuations remains fragile.

"This week will offer the last real chance to put a December cut from the Federal Reserve into question," economists at ING wrote in a note.

While market expectations were too optimistic, the data due this week are unlikely to lead to a hawkish tilt, they said.

Sentiment on Monday was also pressured by signs of escalating frictions between the U.S. and Venezuela. President Donald Trump said on Saturday that the airspace over and around Venezuela should be considered "closed in its entirety," without providing additional details.

Venezuela is a member of OPEC, but its influence in the oil market has been constrained by U.S. sanctions. Still, oil prices were higher on Monday after OPEC+ members reaffirmed their plan to keep output steady and the U.S.-Venezuela stand-off stoked fresh concerns about supply.

Stocks in Saudi Arabia .TASI, the world's biggest oil exporter, were down 0.8%.

LOCAL DATA DRIVES SENTIMENT

South African equities .JALSH were up 0.4%, while the rand ZAR=D3 strengthened 0.2% against the dollar. The local manufacturing purchasing managers' index fell to 42 points in November, from 49.2 in the previous month.

In Europe, Hungary's Budapest index .BUX rose 1.1% and was on track for its best day in nearly two months should current levels hold.

The country's seasonally-adjusted purchasing managers' index rose to 53.4 in November, firming above a long-term average reading of 52.4.

Ukrainian bonds traded slightly firmer. U.S. and Ukrainian officials described talks held on Sunday over a potential Russia peace deal as "productive," though further negotiations are needed before any concrete progress is achieved.

Reuters also reported last week that the government and a group of investors holding its GDP warrants have entered a third round of formal restructuring talks.

In Sri Lanka, stocks .CSE fell 3% and were on pace for their biggest intraday percentage loss since April if levels hold. Bonds also came under pressure after Cyclone Ditwah tore through the island nation, killing 355.

Elsewhere, Turkish equities .XU100 rose 1.1%. Data showed that its economy had grown by 3.7% year-over-year in the third quarter, but fell short of expectations.