EMERGING MARKETS-EM currencies down as risk assets slide on rise in geopolitical worries

Updated at 1023 GMT

By Shashwat Chauhan

Nov 19 (Reuters) - Most emerging market currencies slipped on Tuesday as investors fled to safe-haven assets such as the U.S. dollar and the Swiss franc as tensions rose between Russia, Ukraine and the U.S., with Ukraine's international debt sliding.

Putin on Tuesday approved an updated nuclear doctrine saying that Russia could consider using nuclear weapons if it was subject to a conventional missile assault on it supported by a nuclear power.

It followed reports this week that U.S. President Joe Biden would allow Ukraine to fire American long-range missiles deep into Russia.

"It's the geopolitical risk that's weighing on markets now," said Nicholas Rees, FX market analyst at Monex Europe

Ukraine's sovereign dollar bonds slid more than 1 cent each, with the 2035 maturity XS2895056369=TE falling the most, down 1.8 cents to trade at 49.086 cents on the dollar.

Traditional safe-haven currencies such as the U.S. dollar =USD and the Swiss franc CHF=D3 were on the rise, while gold XAU= also jumped 0.8%.

Traders also pointed to a Bloomberg News report dated Tuesday stating that Ukraine hit Russia With Western-made missiles for first time as a trigger for the selloff.

"We've seen fairly significant sell off across most major currencies, obviously concentrated in CEE and Europe given the proximity (to the conflict)," added Rees.

Currencies of neighbouring Central Eastern Europe $(CEE.SI)$ also slipped against the euro, with Poland's zloty EURPLN= down 0.3%, while Hungary's forint EURHUF= lost 0.4%.

Equities in emerging Europe all traded broadly lower, with the Polish benchmark .WIG20 sliding more than 2%.

Later in the day, Hungary's central bank looks set to leave its base rate at 6.5%, the European Union's joint highest level with neighbouring Romania.

South Africa's rand ZAR=D3 lost 0.8%, while Russia's rouble RUB= dropped 0.4% against the dollar in over-the counter trading.

In South Africa, October inflation numbers due on Wednesday and the local central bank's monetary policy decision on Thursday.

The South African Reserve Bank (SARB) is expected to cut rates by 25 basis points (bps) to 7.75%, according to a poll of economists conducted by Reuters.

MSCI's gauge for emerging market stocks .MSCIEF added 0.5% as of 1023 GMT, on track to rise for the third straight session as bourses in heavyweights China .CSI300, India .NSEI and Taiwan .TWII traded in the green.

Amongst currencies in Asia, China's yuan CNH= was down 0.2% in offshore trading, while the Indian rupee INR=IN hit a lifetime low of 84.415 per dollar.

Beijing told top Wall Street executives that it will move ahead with capital market reforms and in the opening up of its financial sector for foreigners, while supporting Hong Kong in bolstering its credentials as a global financial hub.

The broader EM stocks index dropped more than 4% last week as markets mulled U.S. President-elect Donald Trump's fiscal, trade and immigration policies, which could be a drag on most developing economies.

All eyes are on Trump's cabinet selection, with the search for a Treasury secretary widening after last week's picks for health and defence roles.

Most EM currencies also weakened last week as the dollar continued its charge upwards on expectations the Federal Reserve would slow its pace of easing.

HIGHLIGHTS:

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** China expected to leave benchmark lending rates unchanged on Wednesday

(Reporting by Shashwat Chauhan in Bengaluru; Editing by Ros Russell)

((Shashwat.Chauhan@thomsonreuters.com;))

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