Emerging stocks steady

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Emerging stocks held near eight-month highs on Thursday, as fresh tension over US budget talks led to more caution across markets, but Chinese shares outperformed to close at their highest level since August.

Chinese mainland shares rose 0.3 percent on strength in the resources sector. The index has gained 9.5 percent so far in December and is heading for its best monthly performance for more than two years.

MSCI's emerging equities dipped slightly but stayed close to their highest level since April. Russia held close to Thursday's two-month highs.

Optimism over an imminent deal to avoid the US “fiscal cliff” of steep tax increases and budget cuts was dented after conflict over the talks became more heated.

The Czech crown weakened slightly but hovered near a seven-week high after the Czech central bank defied some expectations it could intensify moves to weaken it.

Other central European currencies were slightly stronger or steady, with the zloty rising 0.1 percent against the euro.

“Judging by how markets are responding today, some of it is profit taking and risk, but a lot of it is preparing for a sudden turn of events for the worst with the fiscal cliff,” said Geoffrey Yu, FX strategist at UBS. “The fiscal cliff is the only risk event FX markets in general are watching.” - Reuters

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