EMERGING MARKETS-Stocks hit 12-day high, S.Africa at record MyZA

LONDON, Oct 17 (Reuters) - Emerging stocks hit a 12-day high
on Wednesday and debt spreads reached their narrowest in over a
year as markets cheered a rating affirmation for Spain, while
South African retailers helped the Johannesburg index to a
record high for a third day in a row.
    Moody's kept a Baa3 rating on Tuesday, based on the
assumption that Madrid will seek help in holding down its debt
costs. While the agency assigned a negative outlook, the
decision assuaged worries the rating would be cut to junk.
 
    Improved sentiment towards the euro zone is boosting demand
for riskier emerging assets.
    Benchmark emerging equities rose half a percent
and emerging sovereign debt spreads tightened by 4 basis
points to their narrowest over U.S. Treasuries since July 2011.
    South African stocks hit record highs as retailers
rose on expectations of strong growth, despite concerns over the
recent wave of strikes in the mining and other sectors.
 
    But the forint fell half a percent, retreating
from recent seven-week highs, Hungarian stocks dropped 2
percent and Hungarian government bond yields rose 20-25 bps
after the country's economy minister announced higher taxes on
banks to cut the budget deficit next year. 
    The shekel hit a five-month high against the dollar,
as Israel's parliament set a Jan. 22 date for a national
election. Opinion polls predict an easy win for Prime Minister
Benjamin Netanyahu. 
   

 (Reporting by Carolyn Cohn; Editing by Ruth Pitchford)