EMERGING MARKETS-Polish zloty slips after unexpected rate cut, broader EM FX down

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EM stocks up 0.2%, FX down 0.17%

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Polish central bank delivers a surprise quarter point cut

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Romania's cenbank leaves interest rates unchanged

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Israeli dollar bonds rally on Gaza ceasefire

By Nikhil Sharma

Oct 9 (Reuters) - Emerging Market currencies came under pressure on Thursday, with the Polish zloty slipping after the central bank's surprise rate cut amid easing inflation.

The zloty slipped 0.1% against the euro, while Warsaw stocks rose 0.35% after the central bank delivered its fourth cut of the year, cutting by 25 basis points to 4.50% on Wednesday.

Most analysts polled by Reuters -18 out of 30- anticipated the decision to hold rates steady. Focus now shifts to National Bank of Poland Governor Adam Glapi?ski's press conference later in the day.

"The cut in October may add to speculation around a similar move in November, especially as the next November macroeconomic projection is likely to point to inflation running close to the central bank target over the medium term, and below the path outlined in the July projection," analysts at ING said in a note.

Meanwhile, the Polish parliament will debate the 2026 budget on Thursday, alongside a draft law to raise bank tax rates from 19% to 30% in 2026, 26% in 2027, and 23% from 2028.

The MSCI index of EM currencies fell about 0.2%, set for its third day of losses in a row and on track for a weekly decline, pressured by a strengthening dollar.

The greenback was on track for its best weekly performance in nearly a year, helped by a falling yen on prospects of increased fiscal spending in Japan following a leadership change.

A parallel index for EM equities added 0.2% to trade near a four-year high, having traded in a tight range throughout the week.

The Hungarian forint declined 0.43% on Thursday, having fallen more than 0.9% this week as investors weigh mounting pressures from the government on the central bank to ease borrowing costs.

The clash comes at a time when inflation still lingers outside the top bank's tolerance band.

Minutes of the September 23 policy meeting, where policy rates were left unchanged, revealed the central bank's stance to maintain tight monetary conditions to restore price stability.

The country's main stock index fell 0.35% on Wednesday, but was still pacing towards a weekly rise on prospects of rate cuts.

In Romania, the currency leu was flat, and the main stock index edged up 0.24% to reach a new high. The local central bank paused its main interest rate at 6.50% on Wednesday.

The decision was attributed to high inflation caused by the end of a government-imposed electricity price cap, as well as tax increases issued to narrow the widest budget deficit in the European Union.

Concerns about the budget deficit and fiscal challenges have pushed the currency to its worst year since 2019.

Fears for fiscal indiscipline also shuddered Czech markets following the weekend election victory for ANO leader Andrej Babis, who has advocated for lavish government spending to raise wages, cut taxes, and accelerate growth - measures that would cost billions of euros.

The Czech crown was subdued, while the country's main equity index slipped 0.2%.

Emerging Markets elsewhere greeted a ceasefire deal between Israel and Hamas that could ease geopolitical tensions in the Middle East and enable the release of Israeli hostages.

Israel's long-dated international bonds rose, with 2120 maturity rising more than 1.5 cents to the dollar.

The currency shekel jumped 0.55% surpass a three-year high, while Tel Aviv shares surged 1.8% on the day to trade near an all-time high.

In South-East Asia, the Philippine peso fell 0.5% after the central bank unexpectedly cut rates by a quarter-point.

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For RUSSIAN market report, see (Reporting by Nikhil Sharma in Bengaluru; Editing by Tasim Zahid)