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EMERGING MARKETS-Stocks slip; Zloty tumbles on rate cut talk

LONDON, Oct 10 (Reuters) - The Polish zloty fell half a percent on Wednesday, after comments by central bank board members increased expectations of a rate cut at the next policy meeting, while South Africa's rand steadied following a 1.5 percent bounce in the previous session.

Polish central banker Andrzej Bratkowski called for a 75 basis point cut to interest rates by the end of the year, adding that "nothing terrible would happen" if the zloty weakened. Monetary Policy Council member Jerzy Hausner was quoted as saying data would point to the need for a rate cut.

Poland held rates last week but is expected to cut in coming months. The comments pushed 2-year and 5-year bond yields lower.

"The zloty is being punished by the very dovish comments which make a November rate cut much more likely and they may even go down the road of a 50 basis-point cut at the next meeting," said Carolin Hecht, a strategist at Commerzbank in Frankfurt.

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GRAPHIC on MSCI emerging index performance 2012:

GRAPHIC on MSCI emerging Europe performance 2012:

GRAPHIC on MSCI frontier index performance 2012,

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see

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MSCI's emerging equities fell 0.3 percent, down for the third day in a row, due to worries over world growth.

The Serb dinar meanwhile rose more than half a percent against the euro to new 3-1/2 month highs after the central bank raised interest rates on Tuesday to 10.75 percent, surprising some in the market who had expected rates to stay on hold.

The dinar has risen for six straight sessions

.

The South African rand firmed slightly

moving

further away from recent 3-1/2 year lows as some striking workers agreed to return to work

.

Central bank Governor Gill Marcus said the country's economic outlook was deteriorating rapidly

. Many see the fallout from the strikes as forcing rate cuts.

"We don't see this move in dollar/rand as sustainable," Hecht said. "We advise buying on dips as we see more risks of strikes, especially in the mining sector."

Turkish assets, meanwhile, were hit by a weaker industrial output data and news that a top general had threatened to respond "with greater force" if shelling from Syria continues to spill across the border.

(Reporting by Sujata Rao; Editing by Anthony Barker)

((sujata.rao@thomsonreuters.com)(+44 20 7542 6176 sujata.rao.thomsonreuters.com@thomsonreuters.net))

((Emerging Markets Prices from Reuters

Equities Latest Net Chg % Chg % Chg on year Morgan Stanley Emrg Mkt Indx

993.50 -3.09 -0.31 +8.41

Poland

2374.06 -2.18 -0.09 +10.71

Hungary

18838.29 -26.81 -0.14 +10.98

Romania

4780.68 -19.26 -0.40 +10.23

Russia

1488.29 -5.87 -0.39 +3.77

South Africa

31916.57 -23.74 -0.07 +12.11 Turkey 68194.27 +131.41 +0.19 +33.02 China 2119.94 +4.71 +0.22 -3.61 India 18631.10 -162.26 -0.86 +20.55 Currencies Latest Prev Local Local close currency currency % change % change in 2012 Czech Rep 24.93 24.95 +0.10 +2.48 Poland 4.09 4.07 -0.43 +9.20 Hungary 282.04 283.26 +0.43 +11.54 Romania 4.57 4.57 +0.13 -5.41 Serbia 113.88 114.61 +0.64 -6.09 Russia 31.13 31.14 +0.04 +3.43

Kazakhstan

150.53 150.46 -0.05 -1.38 Ukraine 8.13 8.13 -0.01 -1.67

South Africa

8.68 8.71 +0.26 -7.11 Kenya 85.05 85.20 +0.18 -0.12 Israel 3.86 3.87 +0.07 -1.40 Turkey 1.82 1.82 +0.25 +3.67 China 6.28 6.29 +0.07 +0.17 India 53.10 52.68 -0.79 -0.17 Brazil 2.04 2.04 -0.04 -8.53 Mexico 12.87 12.88 +0.03 +8.35 Debt Index Strip Spd Chg %Rtn Index Sov'gn Debt EMBI+ 269 -3 0.05 691.81

Currency percent change calculated from the daily U.S.

close at 2130 GMT.)) Keywords: MARKETS EMERGING

Symbol
Price
 
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