EMERGING MARKETS-Stocks edge up before ECB, local debt strong
* Emerging stocks up slightly ahead of ECB, Bernanke
* Local debt performing strongly on low-growth outlook
* Ukraine's Naftogaz debt yield near year's high
* Kazakh SWF-owned BTA bank debt weak
By Carolyn Cohn
LONDON, Sept 8 (Reuters) - Emerging stocks rose slightly on Thursday as investors awaited the European Central Bank's monthly meeting and speeches by top U.S. policymakers, but local currency debt continued to perform strongly on monetary easing expectations.
The European Central Bank is expected to leave rates unchanged on Thursday and may signal an end to its five-month-old rate rise cycle, though low world growth has encouraged some market expectations of future rate cuts.
U.S. President Barack Obama is due to propose new job measures at 2300 GMT and Federal Reserve Chairman Ben Bernanke's speech at 1730 GMT will be watched for hints of more economic stimulus later this month.
Emerging markets have been buffeted by worries about a global recession in recent weeks, with risk aversion knocking 9 percent off the MSCI benchmark emerging equities index last month.
"Everyone is data and speech-focused at the moment and it's individual events from one day to the next that will determine how markets perform," said Simon Quijano-Evans, chief emerging market economist at ING.
The MSCI emerging equities index was gained 0.2 percent and the Thomson Reuters emerging Europe index was steady.
Emerging sovereign debt spreads were flat at 339 bps over U.S. Treasuries and emerging European currencies fell between 0.25 and 0.5 percent.
Developed countries face a sharp year-end slowdown led by a contraction in Germany, the OECD said on Thursday, urging central banks to keep rates low or pursue other forms of monetary easing.
The low-rates expectation is supporting emerging market local currency debt. In the latest evidence of easing, Serbia cut rates by 25 bps on Thursday to 11.25 percent.
"Leading (central European) indices point to further growth deceleration in the remainder of the year, consistent with lower inflation and softer monetary policy," BNP Paribas analysts wrote in a client note.
Hungarian five-year local bond yields hit their lowest levels in nearly a year, helped also by the Swiss National Bank's decision this week to target a weaker franc.
Hungarian borrowers are heavily exposed to Swiss franc-denominated loans.
South African bond yields hit fresh record lows on expectations of another interest rate cut, to add to 650 basis points worth of cuts in the two years to the end of 2010. Turkish five-year bonds hit eight-month lows.
The yield on Ukrainian state energy company Naftogaz's 2014 bond traded close to its highest level this year after Ukraine said this week it hoped to raise $10-12 billion in 2012 from the privatisation of companies arising from a restructuring of the firm.
Naftogaz restructured its debt two years ago. The bond yield has risen sharply in the past month, alongside a global market sell-off.
Ukraine's markets are supported, however, by parliament's adoption this week of amendments to a pension reform law, in line with IMF requirements.
The hyrvnia hit 2-1/2 week highs on Thursday.
Meanwhile, Kazakh sovereign wealth-fund owned BTA's debt remained weak on concerns about the bank's financial strength.
The bank's 2018 bond is trading close to record high yields above 22 percent, with investors speculating about a strategy change at the bank. (Additional reporting by Sujata Rao)