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China stocks continue rebound on reopening hopes

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Polish PMI decline deepens in October, Hungary rebounds

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Fed policy statement due 2 p.m. EDT (1800 GMT)

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North Korea fires 17 missiles

Nov 2 (Reuters) - An index of emerging market stocks rose on Wednesday, boosted by shares in China and Hong Kong on hopes of China's post-COVID reopening, while currencies gained as the dollar eased ahead of a crucial Federal Reserve decision due later in the day.

MSCI's index of EM stocks rose 0.5%, extending gains to a third day. Hong Kong's Hang Seng Index and Hang Seng China Enterprises Index jumped more than 2% each, extending Tuesday's rally, which was mainly driven by unverified social media posts over China’s COVID easing.

China's main indexes ended about 1.2% higher, driven also by upbeat remarks from regulators.

Chinese equities are likely to come under pressure in the near term until there is a clear catalyst for recovery, said Kate Marshall, lead investment analyst at Hargreaves Lansdown.

"While the rumour mill suggests China will abandon its Zero COVID policy – which has weighed heavily on economic growth – in March following the People’s Congress, nothing is guaranteed."

Meanwhile, currencies in central and eastern Europe drifted lower, with Hungary's forint, and Poland's zloty trading at 406.7 and 4.7 against the euro respectively.

The Polish manufacturing sector contracted faster in October than in the previous month, a survey showed, falling to 42.0 from 43.0 in September, while Hungary's seasonally-adjusted PMI rose to 56.4 in October from 49.6 in September.

The 50.0 line separates growth from contraction.

"Polish zloty and Hungarian forint should trade higher - based on the current interest rate differential and FX relationship, we see the zloty closer to 4.75 EUR/PLN and the forint closer to 415 EUR/HUF," said Frantisek Taborsky, EMEA FX & FI Strategist at ING.

"With the Federal Reserve meeting today, we expect pressure on CEE to increase during the day, which may lead to a painful end."

Elsewhere, South Africa's rand gained 0.4% against the dollar, which eased as traders were on tenterhooks ahead of the Fed decision. Investors widely expect the central bank to raise its benchmark interest rate by 75 basis points, the fourth such increase in a row.

EM assets have been under pressure this year, with benchmark currencies and stocks down 9% and 30% respectively as rising geopolitical tensions, Fed policy tightening and fears of a looming recession spook investors.

Further stoking worries on Wednesday, North Korea fired at least 17 missiles into the sea, including one that landed less than 60 km (40 miles) off South Korea's coast. For GRAPHIC on emerging market FX performance in 2022, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2022, see https://tmsnrt.rs/2OusNdX

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(Reporting by Anisha Sircar in Bengaluru Editing by Mark Potter)