EMERGING MARKETS-Hit new 2009 highs, Latvia worries persist

* Emerging shares, bonds at new 2009 highs

* Russian shares, rouble hit highs on commodities resurgence * Latvia woes weigh but Lithuania bond raises $1.5 bln

By Sebastian Tong

LONDON, Oct 7 (Reuters) - Emerging assets set fresh 2009 highs on Wednesday buoyed by resurgent gold and oil prices, while debt insurance costs for Latvian sovereign debt rose on worries that continued wrangling over the country's budget would threaten further international aid.

Emerging currencies were mostly weaker but Russia's rouble advanced to a new 2009 high, prompting central bank intervention to slow its ascent.

Rising for their third successive session, emerging shares <.MSCIEF> rose 0.5 percent by 1030 GMT, hovering at their highest level 13 months.

Emerging sovereign debt <11EMJ> narrowed 1 basis point to trade at 311 bps over U.S. Treasuries, their tightest levels since September last year, prior to the Lehman Bros collapse.

"We're continuing to see cash coming into the (emerging markets) asset class and that is helping to drive yields lower," said Tim Ash, Head of CEEMEA Research at RBS.

Gold hit record levels on the back of a weaker dollar, leading a broader commodities rally that boosted shares in resource-focused Russia <.MCX> and South Africa <.JTOPI>. Russia's dollar-denominated RTS Index <.IRTS>, which has more than doubled in value this year, rose more than 2 percent to hit a 12-month high while Israeli shares <.TA25> eased after touching over 13-month highs.

Turkish shares <.XU100> also slipped on profit-taking after hitting their highest since January 2008 early in the day.

LATVIA WOES

Russia's rouble hit a fresh 2009 high, rising 0.3 percent against its dollar-euro basket and its central bank was seen buying foreign exchange early in the day to halt the unit's appreciation. [ID:nL7533845]

The Israeli shekel was flat against the dollar a day after the country's central bank was seen buying as much as $200 million to slow the currency's appreciation. [ID:nL6360093]

Also trading sideways was the Turkish lira, which hit a two-month high versus the dollar in the previous session on hopes that the country would soon reach a financing agreement with the International Monetary Fund (IMF).

Comments by the Czech central bank chief earlier this week that he would consider intervening to keep the crown weak continued to weigh on the currency, which languished at its weakest level versus the euro in nearly five weeks. [ID:nL58899]

"The economic growth story in eastern Europe is still weak so currencies seemed to have gone ahead of themselves with their recent appreciation. So the crown weakness will extend elsewhere in the region," said RBS' Ash.

Hungary's forint and the Polish zloty fell 3 percent each against the euro after three straight days of gains.

Meanwhile, worries about Latvia appear to be unallayed by reassurances from its finance minister that the country will fulfil its obligations to international lenders such as the IMF. [ID:nN06421233]

Credit default swaps to insure Latvia's sovereign debt against default or restructuring rose by nearly 20 bps amid heightened donor criticism that its budget cuts are insufficient. [ID:nL7274406 ]

"Adding to the worries Latvia's prime minister is having legal amendments prepared to help homeowners in trouble by only allowing lenders to collect the current market value of a property from mortgage holders," SEB said in a research note. Undeterred by problems with its neighbouring Baltic state, Lithuania raised $1.5 billion in a five-year benchmark dollar bond priced at 462.5 bps over U.S. Treasuries. [ID:L7611887] (Reporting by Sebastian Tong; Editing by Toby Chopra)