EMERGING MARKETS-EM assets extend gains as Fed cut hopes boost momentum

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Markets find footing after sharp declines last week

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Hopes for Russia-Ukraine peace deal kept alive

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Ukrainian bonds rally

By Niket Nishant and Twesha Dikshit

Nov 26 (Reuters) - Emerging market assets rose on Wednesday, stretching their gains for the week as firming bets on an interest rate cut by the Federal Reserve boosted sentiment, while investors eyed developments on the proposal to end the war in Ukraine.

The rebound comes after a bruising downturn last week, when unease over lofty AI valuations and tech behemoths curbed risk appetite.

The moves will be critical to setting the tone for the region as markets head toward the end of the year. Rate cuts by the Fed lower funding costs and typically channel more capital into higher-yielding emerging markets currencies.

At the same time, any credible progress on a peace deal in Ukraine could unleash bullish spirits. Ukrainian President Volodymyr Zelenskiy said on Tuesday he was ready to advance a U.S.-backed framework for ending the war with Russia and discuss disputed points with U.S. President Donald Trump.

MSCI's emerging market equities index jumped 1%. Regional currencies were up 0.1%.

UKRAINE BONDS CLIMB

Some Ukrainian bonds climbed on Wednesday, with a few issues trading at their highest levels in nearly nine months.

"While the initial deal was seen as strongly favouring Russia, it now sounds as if Ukraine has finally had some input and has managed to engineer some significant changes," said David Morrison, senior market analyst at Trade Nation.

Investors will also be parsing data releases, including Polish unemployment figures for October and Russian industrial production numbers.

Polish equities inched up, on track for their third straight day of gains if current levels hold. The Polish zloty was 0.2% weaker against the euro.

State-controlled coal miner JSW's shares were up 2.5% a day after results.

Separately, Senegal announced a recalculated gross domestic product resulting in improved debt metrics, a move the finance ministry has described as an attempt to give a more accurate picture of the economy as it grapples with a crisis over unreported debt.

OVERSUPPLY CONCERNS PRESSURE OIL

Oil prices climbed on Wednesday after sliding to a one-month low in the previous session, though an expected supply glut and a potential Russia-Ukraine peace deal kept a tight lid on gains.

Saudi Arabia's stock index fell nearly 1% and was on track for its third consecutive day of losses.

"Positive signals from both the U.S. and Ukraine regarding a Russia-Ukraine peace deal continue to put pressure on energy markets. However, there's little clarity on where Russia stands on the current plan," economists at ING wrote in a note.

Elsewhere in the emerging market universe, South Korean shares advanced 2.7% and Taiwan shares climbed 1.9%. Malaysian, Singaporean and Indonesian stocks also jumped. (Reporting by Niket Nishant and Twesha Dikshit in Bengaluru; Editing by Jan Harvey)