EMERGING MARKETS-EM assets firm ahead of busy data week; US holiday mutes volumes

By Pranav Kashyap

Feb 16 (Reuters) - Most central and eastern European assets were boxed into tight ranges on Monday as investors sifted through a fresh spate of geopolitical headlines in holiday-thinned trading.

U.S. Secretary of State Marco Rubio, embarking on a trip to Slovakia and Hungary on Sunday, pledged to deepen cooperation with Central Europe. His itinerary draws added attention given Hungary's conservative leadership has notably warm ties with President Donald Trump.

In currency markets, the Hungarian forint EURHUF= edged up 0.4% versus the euro, extending its run as the region's standout performer this year. As the country heads toward a national election in April, opinion polls show a pro‑EU candidate holding a lead. Budapest stocks .BUX fell 0.5% on the day.

Across broader emerging markets, the MSCI EM equity index .MSCIEF gained 0.4%, while the EM currency gauge .MIEM00000CUS advanced 0.3%.

With China, South Korea, Taiwan, the United States, and Indonesia closed for holidays, volumes were light and price action muted.

Later this week emerging markets face a busy run of key data, including inflation prints from South Africa, Russia, Malaysia, India, and the U.S., alongside rate decisions in Indonesia and Romania.

Romania's monetary policy decision, due Tuesday, lands at a delicate moment as consumer inflation eased to 9.62% in January and Fitch reaffirmed the country's sovereign rating at the lowest investment-grade rung. The rating agency kept a negative outlook, citing ongoing strain on public finances.

The leu EURRON= was flat, while stocks .BETI traded higher.

The central bank is juggling competing pressures as Romania grapples with the EU's widest fiscal deficit, has yet to approve a budget, and slipped into a technical recession in the fourth quarter after austerity measures cooled demand.

The Israeli shekel ILS=, up roughly 3% year-to-date against the dollar, nudged up 0.4% on the day, while stocks .TA125 gained 0.6% after inflation came in slightly softer than expected.

The central bank meets next week to decide on rates. Israel's cabinet approved additional steps to tighten control over the occupied West Bank and ease land purchases for settlers, a move Palestinians condemned as a "de-facto annexation."

"With inflation surprising to the downside and the shekel continuing to gain ...we think it will be hard for the central bank to resist market pressure and avoid a cut at the upcoming meeting," JP Morgan's Anatoliy A Shal said.

Ukraine's international dollar bonds continued to climb, buoyed by news that Kyiv and the IMF agreed to soften some conditions, including politically sensitive tax increases, for a new $8.2 billion lending programme.