* Investors cautious ahead of U.S.-China meeting at weekend
* Emerging market stocks rise for third straight day
* S.Africa's Absa bank slips after steep profit warning
By Shreyashi Sanyal
Aug 13 (Reuters) - Emerging market currencies firmed on
Thursday, against a dollar that lost ground as hopes of more
stimulus in the United States waned, while investors awaited a
meeting between Washington and Beijing to discuss the Phase 1
trade deal over the weekend.
Most major currencies in developing economies in Europe,
Middle East and Africa rose, with Asian currencies also in the
black.
The U.S. dollar, which is already weighed down by a
decline in Treasury yields, fell further as investors remained
unsure that there would be a compromise between Republicans and
Democrats over additional coronavirus aid.
"Investors should be prepared for a risk-off episode in the
near term in case Congress fails to compromise on a major new
fiscal stimulus," BCA Research strategists wrote in a client
note.
"Ultimately the U.S. Congress will pass a major stimulus
bill worth around $2.5 trillion, but short-term execution risks
are elevated."
Russia's rouble firmed 0.3%, while South Africa's
rand edged higher as trading remained cautious ahead of a
meeting between the United States and China, with ties between
the two nations worsening in the recent few weeks after the
Trump administration banned popular Chinese apps and slapped
sanctions on high ranking officials.
"China is reportedly planning to add more topics including
recent bans on apps operated by Chinese companies," said Hao
Zhou, economist at Commerzbank.
"U.S. officials (are also likely to) demand more from
China's side, therefore the risks remain high as the meeting
might end up with an unpleasant mood."
Even as the dollar weakened, the Turkish lira
struggled to stay afloat amid rising worries of a full-blown
crisis, as markets look towards the central bank for more
decisive action to stabilise the currency. The lira is among the
worst performing emerging market units so far this month, with
declines of 5%.
Currencies in central and eastern Europe including Hungary
, Poland, Romania and the Czech
Republic, were mostly flat against a firming euro.
Stocks in the developing world rose for the third straight
day, with the MSCI index for emerging market stocks
rising 0.2%.
Johannesburg stocks opened 1% lower as shares in
lender Absa fell over 5%, a day after it warned its
half-year profits could be almost wiped out as a result of the
coronavirus crisis.
For GRAPHIC on emerging market FX performance in 2020, see http://tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance in 2020, see https://tmsnrt.rs/2OusNdX
For TOP NEWS across emerging markets
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see
(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Kevin
Liffey)