EMERGING MARKETS-Stocks down 1.5 pct, FX slip on Greek delay MyZA

* Stocks fall 1.5 pct as Greek bailout delay weighs
    * Hungarian bonds reverse gains
    * Russian stocks down 1.7 pct; rouble nr 2-wk low
    * Most emerging currencies decline

    By Sujata Rao	
    LONDON, Feb 16 (Reuters) - Emerging market assets fell
on Thursday, hit by Greece's protracted battle to secure a new
bailout, with Hungarian government bonds reversing the bulk of
gains posted a day earlier when the central bank moved to
kickstart bank lending.	
    Euro zone finance ministers on Wednesday failed to resolve
all the issues surrounding a second aid package for Athens,
putting off any decision on the matter until Feb. 20 at the
earliest. 	
    That frayed market nerves with the Euro STOXX 50 volatility
index, Europe's main gauge of investor anxiety, rising 6
percent to a one-month high.	
    Stock markets fell worldwide, with emerging equities 
 retreating almost 1.5 percent after the previous
session's 1 percent-plus gains.	
    Most emerging currencies eased, with Asian trading seeing
heavy losses on the Korean won and Malaysian ringgit while the
Russian rouble and South African rand pulled back almost one
percent to the dollar .	
    But many analysts remain sanguine, seeing the pullback as
temporary, especially given the vast amounts of liquidity
central banks in developed economies are injecting into the
financial system.	
    "It is the Greek story that is triggering this turnaround,
but given the uncertainty about where we're going from here on,
Greece is having a relatively limited market impact - we're not
seeing the kind of moves we saw in December," said Lars
Christensen, chief emerging markets analyst at Danske Bank.	
    Emerging assets have chalked up hefty gains since the start
of 2012 with stocks up around 14 percent and most currencies
rising 7-8 percent against the dollar and euro. However the
rallies have stalled in recent sessions amid fresh evidence that
the turmoil in the euro zone is far from resolved.	
    On Wednesday, data showed a sharp slowdown in central
European economies - heavily exposed to the crisis - with the
Czech Republic falling into recession.	
    "CEEMEA markets seem to be due for a correction. The most
affected ones are likely to be the ones that performed the best
up to now - Hungarian and Polish assets," BNP Paribas said.	
    	
    HUNGARY RETREATS	
    In Hungary, bonds were boosted on Wednesday by new central
bank measures to support lending via two-year loans in exchange
for collateral and mortgage bond purchases. Short-dated yields
had fallen 20-30 bps with the three-year yield falling to 8
percent for the first time in 2-1/2 months.	
    But Thursday's risk-off mood took its toll and yields rose
10-15 bps across the board.	
    Stocks also gave up gains, with shares in biggest lender OTP
falling 3 percent after rising more than 2 percent on Wednesday
. The forint, which touched a 4-1/2 month high on
Wednesday, slumped 0.5 percent to the euro 	
    "There are quite clear limits to how much the Hungarian
central bank really can do in terms of monetary easing. This
(the credit facility) is basically a form of quantitative easing
and if they were to do any major UK-style scale QE then the
forint would collapse and that would do great damage,"
Christensen said, citing Hungary's high exposure to euro- and
Swiss franc-denominated loans.	
    Hungary, keen for an aid package from the International
Monetary Fund and European Union, has been trying to iron out
differences with the lenders over controversial laws, especially
those seen as infringing central bank independence.	
    Minutes of the last meeting of the country's central bank
revealed on Wednesday that last month's decision to hold
interest rates came about after Governor Andras Simor and his
two deputies, who proposed a rise, were voted down by the four
board members appointed last year by the government.	
    Central bankers said on Thursday interest rates would remain
flat until the IMF/EU aid deal is signed 	
    "There are no rate hike expectations...now," a trader in
Budapest said. "If the government reaches the IMF deal, the
market can easily slip into rate cut expectations and then
anything yielding more than 8 percent can become attractive."	
    Politics also will weigh in Russia where the rouble fell 0.7
percent to 30.22, its weakest since early
February and lost 0.2 percent to the euro. 	
    "The rouble faces resistance from profit-taking in short
positions in foreign currencies. Elections are looming so the
strategy now is to buy (dollars) on dips," said a dealer in
Moscow, referring to the March 4 presidential election.	
    In Egypt, credit default swaps rose to a one-month high
after fresh protests over the deaths of 74 soccer fans piled 
more pressure on the country's ruling generals. Shares fell 1
percent as investors pocketed profits from the market's
40-percent rally since the start of 2012.	
	
 (Additional reporting by Alessandra Prentice in London; Sandor
Peto in Budapest; Editing by John Stonestreet)