REFILE-EMERGING MARKETS-EM stocks surge on Fed rate cut hopes, currencies flat amid US shutdown jitters

(Refiles to add date) * EM stocks up 1.25%, FX flat * Romania producer prices rise 3.21% year-on-year * Romania's unemployment rate rises to 5.9% in August * CCC slips after reporting Q2 results By Nikhil Sharma Oct 2 (Reuters) – Emerging market stocks hit a more than four-year high on Thursday, buoyed by expectations of a Federal Reserve rate cut this month, while currencies were range-bound amid the U.S. government shutdown. The MSCI index of emerging market equities gained about 1.25% – on track for its best single-day jump in more than one month. The broader currency gauge was flat as investors weighed the duration of the U.S. government shutdown and its implications for economic data and the Federal Reserve's policy outlook. The U.S. dollar was subdued on Thursday. "So as long as the dollar is not showing direction, it is difficult to expect that CEE will be moving clearly in one direction or the other," said Piotr Matys, senior FX analyst at In Touch Capital Markets. "At this stage, investors are trying to assess how long the U.S. government shutdown is going to last, so they can assess potential implications for the US economy." With key employment data postponed, investors looked to Wednesday's weak ADP National Employment Report, bolstering expectations for rate cuts at the Federal Reserve's remaining meetings this year. A rally in the technology sectors in Asia also boosted sentiment across global markets after chip heavyweights Samsung Electronics and SK Hynix inked partnerships to supply OpenAI data centres. South Korea's benchmark index KOSPI surged 2.7%, while Hong Kong's Hang Seng climbed 1.6%. In Central-Eastern Europe, Poland's main index was among the top movers for the day, up 0.54%, primarily supported by banking giants. Shares in lenders Polska and PKO BP jumped 2% and 2.8%, respectively. Poland's zloty was steady. Renewed support for Ukraine, after the United States agreed to provide Kyiv with intelligence on long-range energy infrastructure targets within Russia, also aided sentiment. Hungary's forint was down 0.16%, while the Czech crown also slipped 0.1% on Thursday. Both regional currencies have logged significant gains this year, with the crown rising 3.7% and the forint up 5.3% year-to-date. A Reuters poll said the Czech crown looked set to hover off its 22-month high in the coming six months, while the forint was likely to lead losses among central European currencies strained by the possibility of rate cuts amid a weak economic recovery and 2026 election uncertainty. Additionally, the zloty is expected to hold ground and Romania's leu is seen falling. Meanwhile, the Czech Republic will head to the polls on Friday and Saturday, with opinion polls suggesting a comeback for billionaire former prime minister Andrej Babis, whose party has promised to shield Czech voters from dangers beyond the country's borders such as climate and migration. Equities in Prague were steady, while Budapest stocks were up 0.43%. Romania's main stock index gained 0.2% and the local currency was flat. Fresh data showed the unemployment rate edged up to 5.9% in August, from 5.8% in July. Also, producer prices rose 3.21% year-on-year in August, but fell 0.61% month-on-month. Among individual movers, Polish footwear and fashion retailer CCC slipped 5.3% after reporting second-quarter results below expectations. For TOP NEWS across emerging markets For CENTRAL EUROPE market report, see For TURKISH market report, see For RUSSIAN market report, see (Reporting by Nikhil Sharma; Editing by Kate Mayberry)

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