EMERGING MARKETS-Stocks at new two-month low on tech selloff; Hungary in focus 

By Johann M Cherian

Oct 20 (Reuters) - MSCI's emerging markets equity index touched a two-month low on Tuesday, pressured by fresh losses in Asian tech stocks, while the Hungarian forint inched higher after the government presented a deficit-cutting 2027 budget ahead of an interest rate decision.

The benchmark index .MSCIEF slid 1.2%, with AI stocks in South Korea .KS11, Taiwan .TWII and Hong Kong .HSTECH fell sharply as investors awaited Wall Street bellwethers' earnings for clues on the sector.

An uptick in Brent crude prices to $110 a barrel also weighed on sentiment as fresh attacks on Saudi infrastructure offset potential relief over energy supplies from Russia.

In Central and Eastern Europe, the focus was on Hungary's budget plans and a central bank decision at which most economists expect rates to hold.

Prime Minister Peter Magyar said on Monday that his government would target a much lower deficit of 4.9% of gross domestic product in 2027, aiming to cut it below the European Union's target of 3% by 2030. The goals were seen as a credibility test for Hungary's ambitions to adopt the euro, although Magyar gave no adoption timeline.

The forint inched up 0.1% at 362 per euro, while local stocks .BUX slipped 0.1%.

"The crucial point of interest will be whether or not MNB will still signal rate cuts as a realistic option for November or December," Tatha Ghose, an FX analyst at Commerzbank, said about the upcoming decision by the National Bank of Hungary.

"The (economic) recovery may still prove uneven, but this is hardly a crisis-like backdrop which demands lower interest rates when underlying inflation is running faster than target."

INDONESIA ATTEMPTS A REBOUND

Indonesian stocks .JKSE jumped 4.6% after authorities in Jakarta introduced measures to restrict selling following a record two-day $82 billion rout sparked by index provider MSCI's warning of a possible removal of Indonesian stocks from its global indexes.

To contain the fallout, the stock exchange met with MSCI and said it would exclude from its benchmark index any stocks with a high concentration of ownership by any person or entity.

The rupiah edged up 0.3%, ahead of a central bank decision on Wednesday. Most economists anticipate no change in rates, but officials said they will be ready to intervene to stabilise the rupiah, which has dropped over 7% this year.

Meanwhile, Ukraine's international bonds maturing in 2030 and 2035 steadied near their early April lows as US President Donald Trump's special envoy Steve Witkoff and Ukrainian President Volodymyr Zelenskiy are set to meet in Norway this week to negotiate an end to the war.

The yuan hit its highest since 2022 after the People's Bank of China left loan rates steady for a 17th consecutive month.