EMERGING MARKETS-Stocks steady after China stimulus, FX inch down amid geopolitical jitters

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S&P Global revises Israel’s outlook to ‘negative’

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China’s issues $137 bln new bonds to help economic recovery

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EM equities up 0.1%, FX off 0.2%

By Johann M Cherian

Oct 25 (Reuters) – Most equities across emerging markets were steady on Wednesday as investors took some comfort from latest spending plans by the world’s second-largest economy, China, while geopolitical uncertainties in the Middle East remained a concern.

MSCI’s index tracking emerging markets stocks rose nearly 1% in early trade, and was last up 0.1% amid volatile trading.

Heavy-weight China stocks bolstered early gains and closed 0.5% higher after China’s government approved a $137 billion bond issue, adding that the new fiscal stimulus will help bolster economic recovery.

“The additional fiscal support approved today is the intervention we had been expecting and that was needed to prevent an abrupt fiscal tightening in China in the closing weeks of the year,” said Mark Williams, chief Asia economist at Capital Economics.

“These new steps will keep it supportive but not deliver any additional boost.”

Keeping a lid on optimism were developments in the Middle East as investors were concerned about the conflict widening in the region and involving larger players like Iran, that could threaten oil supplies, a crucial resource to emerging markets.

Crude prices pared early losses and were marginally higher, while major crude importer India’s rupee edged 0.2% lower and Turkey’s lira traded 28 to the dollar.

A basket of emerging markets currencies dipped 0.2% against the greenback by 0925 GMT.

Meanwhile, the Israeli shekel traded tepidly after S&P Global revised Israel’s outlook to “negative” from “stable” overnight, citing risks that the conflict could spread more widely with a more pronounced impact on the economy and security situation in the country.

More broadly, risk sentiment improved since the last session as yields on longer-dated U.S. Treasury notes retreated. U.S. economic data this week could determine the outlook for monetary policy in the world’s largest economy.

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Among currencies in eastern and central Europe, Hungary’s forint led losses dipping 0.5% against the euro after the local central bank’s bigger-than-expected cut to its base rate on Tuesday.

In Poland, the benchmark index added 0.2% with Santander’s Polish unit gaining 0.9% after posting a more than a five-fold rise in its quarterly net profit and beating market expectations.

In Russia, the rouble strengthened to a more than six-week high at 93 to the greenback as exporters increased sales of foreign currency revenues.

Elsewhere, a representative of the International Monetary Fund said the lender’s mission will visit Pakistan in the following week to discuss the first review of the country’s current $3 billion standby arrangement. The local rupee climbed 0.6%. (Reporting by Johann M Cherian in Bengaluru; Editing by Mrigank Dhaniwala)