London – Emerging equities edged up towards the previous day’s one-month high on Tuesday on hopes of further monetary stimulus from the U.S., while hopes of a speedy international aid deal boosted Hungary’s forint to five-week highs.
Spain’s rising debt costs and signs Madrid will soon need international help have eclipsed news from Greece where conservatives are forming a coalition government.
MSCI’s emerging equity index firmed 0.2 percent, rising for the third straight day but stayed near 1-month highs as yields at a Spanish t-bill auction rose above 5 percent and the ZEW survey showed a sharp decline in German economic conditions.
However expectations for some more stimulus action from the U.S. Federal Reserve, which starts a two-day policy meeting later on Tuesday, helped markets nudge higher.
Hungary’s forint rose almost half a percent on news a disputed central bank law, the main obstacle to securing aid, had been reviewed and a new version agreed with international lenders would be passed in parliament soon .
The leu was flat a day after Romania rejected all bids at a T-bill auction.
The worst performing currency in the region was Russia’s rouble which fell 0.9 percent to the dollar, hit by oil’s fall under $95 a barrel.
Egyptian stocks fell 0.3 percent to five-month lows extending losses after army rulers tightened their grip on power, throwing the promised transition to democracy into doubt and raising the prospect of more pain for the economy.
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Markit data showed Egypt’s 5-year credit default swaps rose 7 basis points to new three-year highs while a debt auction on Monday drew fewer bids than expected and a rise in yields.
In neighbouring Tunisia, CDS rose further to a new three-year high of 280 bps on concerns over the unrest caused by riots by the country’s Salafi Islamist group.
