Hungary's forint fell and the cost of insuring its debt hit six-week highs on Friday after comments from its prime minister appeared to pose another hurdle to an aid deal, but emerging stocks rose after weaker-than-expected Chinese GDP made fiscal stimulus more likely.

Hungary's Viktor Orban said on Friday that political conditions for aid talks were “inconceivable and unacceptable”, risking further delays to a multibillion euro financial backstop that central Europe's most indebted country needs to avoid a financial crisis.

The country remains at loggerheads with Europe over central bank and other legislation, but its lenders want that dispute resolved before reaching an aid deal.

“So far the Hungarian government has tried to keep up positive momentum for the IMF/EU talks, but this kind of talk will weigh on the forint,” said Carolin Hecht, emerging markets strategist at Commerzbank in Frankfurt.

“If they don't get a deal done the euro/HUF above 300 will be the new normal.”

As of 0950 GMT the forint was 0.5 percent down versus the euro at 297.20 and Hungarian stocks fell 1 percent to a near three-month low. The cost of insuring the country's debt against default hit 567 bps, according to Markit, its highest level since the beginning of February.

Broader emerging stocks were more resilient after news that the Chinese economy grew by 8.1 percent in the first quarter of 2012, its slowest rate in nearly three years.

Market participants said a slowdown in China had been well-signalled and could result in policy changes as the government tries to steer the economy away from a hard landing.

The MSCI emerging markets index rose 0.7 percent but it looked headed for its fourth straight week of losses.

“Data out late yesterday showed a strong increase in Chinese bank lending...and today's weak GDP number should also boost the chances of further cuts in banks reserve requirements,” RBC Capital Markets analyst Brian Jackson said in a note.

“This outlook for somewhat improved external conditions and a more supportive domestic policy stance suggests that Q1 should be the trough for the current cyclical slowdown in Chinese growth.”

Chinese stocks rose 0.4 percent, ending at a three-week high. Eastern and central European indices were largely flat, though Polish stocks fell 0.5 percent.

The South African rand erased gains to weaken 0.5 percent on the day. Thirty percent of South African exports are to Asia, making the rand especially vulnerable to signs of weakening in the Chinese economy.

Emerging sovereign debt spreads widened over US Treasuries by 2 basis points to 332 bps. - Reuters