LONDON, Feb 5 (Reuters) - Emerging stocks dipped 0.6 percent

on Tuesday, touching one-week lows, while 5-year Hungarian debt

insurance costs surged past 300 basis points for the first time

since November on expectations of a new bond issue.

MSCI's emerging equity index fell for the second

day in a row, weighed down by Asian markets that played catch-up

with the previous session's losses in Europe and the Americas,

caused by worries of political turmoil in Spain and Italy.

The index has returned 1.7 percent so far this year, lagging

4.6 percent gains for the MSCI world index.

'Performance is very differentiated, we are seeing strong

performance in Russia, Turkey and India while others such as

Korea and South Africa are dragging down the index,' said John

Lomax, head of emerging equity strategy at HSBC in London.

Seoul fell 0.8 percent on Tuesday, having lost 3 percent on

the year on fears a weak yen will hit Korean exporters.

In emerging Europe, Turkish shares rose 0.4 percent

while most other markets lost ground despite services PMI data

hinting at signs of recovery in the euro zone.

Investors were focusing on Hungary which will conclude a

series of investor meetings on Tuesday, with expectations of a

bond launch for up to $2 billion.

Hungarian five-year credit default swaps rose 9 basis points

to 307 bps, almost a three-month high, Markit data showed, while

Hungary's existing 2021 dollar bond yield has

risen around 10 basis points over the past week.

'Bondholders are trading cautiously in terms of the

secondary curve, but once the deal is out, if (the amount) is

light, the market could rally,' said Luis Costa, head of CEEMEA

debt and currency strategy at Citi.

On currencies, the Romanian leu was steady after

the central bank, constrained by high inflation, held interest

rates unchanged.

The Polish zloty was likewise flat ahead of this

week's central bank meeting that is expected to deliver a

quarter point rate cut, the fourth in a row.

The Egyptian pound firmed marginally after the

central bank tightened its trading band.

(Reporting by Sujata Rao; editing by Stephen Nisbet)

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

sujata.rao.thomsonreuters.com@reuters.net))

Keywords: MARKETS EMERGING

( Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg on year Morgan Stanley Emrg Mkt Indx 1066.70 -6.03 -0.56 +1.09 Czech Rep 997.29 -10.24 -1.02 -3.99 Poland 2477.55 +7.82 +0.32 -4.08 Hungary 19108.37 +18.16 +0.10 +5.15 Romania 5606.21 +22.24 +0.40 +8.87 Russia 1614.02 +1.50 +0.09 +2.41 South Africa 36270.74 +45.53 +0.13 +4.24 Turkey 81059.85 +337.20 +0.42 +3.65 China 2433.13 +4.98 +0.20 +7.23 India 19659.82 -91.37 -0.46 +1.20 Currencies Latest Prev Local Local close currency currency % change % change )

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