* Emerging stocks edge up, debt spreads tighten
* Zloty higher after Moody's affirms Poland rating
* Forint edges up ahead of rates decision
* Romanian leu hits 3-mth high, IMF positive
* Defaulted North Korean debt prices creep higher
By Carolyn Cohn
LONDON, Dec 20 (Reuters) - Emerging stocks and debt
edged higher on Tuesday helped by an upbeat outlook for the
German economy from a key survey, and the zloty hit a 12-day
high against the euro after Moody's affirmed Poland's ratings.
The Munich-based Ifo think tank said its business climate
index rose to 107.2 in December from 106.6 in November.
This helped to sweeten uncertain emerging markets, which are
becoming increasingly linked to the euro zone's problems.
Euro zone ministers agreed on Monday to boost the IMF's
resources by 150 billion euros to help tackle the region's
two-year old debt crisis, but it was unclear if the bloc would
reach its overall 200 billion euro target after Britain bowed
out.
"German data has provided short-term relief but structural
issues remain. This is a crisis that is euro-centric and not
based on the strength of leading indicators but on the
creditworthiness of euro zone economies," said Cristian Maggio,
emerging markets strategist at TD Securities.
"Given that the rating actions on these countries over the
next few months will all be negative, I don't see how the
situation can be supportive for risk in the medium term."
The MSCI emerging equities index ticked up 0.3
percent after hitting 2-1/2 week lows on Monday. The index is on
course for a 23 percent loss in 2011, due to wariness over risky
assets, compared to a fall of 13 percent in world stocks.
The Thomson Reuters emerging Europe index
gained 0.5 percent and emerging sovereign debt spreads
tightened by 5 basis points to 385 bps over U.S. Treasuries.
Spreads were around 250 bps over Treasuries at the start of
2011.
The zloty rose 0.5 percent to a 12-day high against the
single currency after rating agency Moody's confirmed Poland's
A2, citing the country's "strong and proven track record".
"Surely such a decision will help the zloty ahead of the
year-end, and this news should particularly be noticed by
foreign investors," said Piotr Poplawski, analyst at Rabobank's
BGZ.
The Hungarian forint inched up against the euro
ahead of a rate decision expected to result in a half-point rise
to 7 percent, following a 50 bps rise last month.
The forint is trading 5 percent above record lows hit last
month, but investors are feeling more nervous about Hungary
after the IMF and the EU cut short talks with Budapest last week
due to concern over a new central bank bill.
"The forint is now rallying on the likely interest rate
hike," said Maggio. "Next year could see the forint weaker,
especially if the IMF deal doesn't transpire."
The Romanian leu rose sharply to a three-month
high after the IMF said late on Monday Romania was making good
progress under an economic programme, and freed up a further
$661 million in aid that can be drawn on if needed.
Romania sold a larger than planned amount of one-year
T-bills on Monday at lower yields than in the previous tender.
Turkish stocks hit their lowest in nearly four
weeks and the lira hovered near 2-1/2 month lows.
A report published by Morgan Stanley on Dec 16, saying a
sharp slowdown is on the horizon for the Turkish economy has
dented the country's assets.
The rouble traded near 2-1/2 month lows
against the dollar and a euro-dollar basket, on risks from the
euro zone and North Korea.
Prices of defaulted North Korean debt are creeping higher,
to 14/18 cents on the dollar according to frontier markets
broker Exotix, as some adventurous investors take a long-shot
bet that the secretive country could open up after the death of
Kim Jong-il.
"In such a closed country, with decision-making concentrated
in a small ruling elite, few outsiders can confidently predict
how the country will respond," said Stuart Culverhouse, chief
economist at Exotix, in a note.
"The regime is known (for) behaving erratically."
Kazakh state-owned debt continued to suffer, as hundreds of
oil workers held a third day of protests in the capital of
Kazakhstan's western oil-producing region on Monday.
The yield on Kazmunaigaz' 2015 dollar bond hit its highest
in over two months.
"There will be heightened fear now among the ruling elite of
an Arab Spring... this might lead to more control of public
opinion, a further centralisation, a higher role of the special
services etc, which is negative from an investor's point of
view," said Unicredit analysts in a client note.
(Additional reporting by Sebastian Tong; Editing by John
Stonestreet)
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