* Turkish lira at three-week low

* MSCI EM stock index falls 0.2%

* Russian assets fear political clash with the west

By Ambar Warrick

Jan 18 (Reuters) – Russia’s rouble led losses in emerging-market currencies on Monday as oil prices plummeted, while most stocks fell further from record highs as a spike in global coronavirus cases curbed appetite for risk-driven assets.

The rouble sank about 1.1%, coming under pressure as the possibility of new COVID-19 lockdowns across the globe hurt the crude market.

The detention of prominent Kemlin critic Alexei Navalny over the weekend drew ire from several U.S. allies, raising the possibility of a political clash with the west and further pressuring Russian assets.

Most other emerging-market currencies in Europe, the Middle East and Africa retreated as spiking COVID-19 cases in China and the United States hit sentiment. Positive gross domestic product data from China did little to revive hopes, as it pointed to an uneven economic recovery across the globe.

Doubts over the timing of vaccination programmes have crept into markets recently, undermining hopes for a steady economic recovery in 2021.

Emerging-market currencies have retreated over the past week as a result, with a spike in U.S. treasury yields and the dollar also providing pressure.

Turkey’s lira fell about 0.6% to a three-week low after President Tayyip Erdogan on Friday downplayed high interest rates and repeated his unorthodox view of cutting interest rates in order to lower inflation.

The move raises concern over how much the government will work to rein in inflation, which has been in double digits for three straight years. At Erdogan’s insistence, Turkey had kept had rates low most of that period, until weakness in the lira prompted a steep rising cycle in late 2020.

“We think that central bank chief Naci Agbal will maintain high interest rates for 6-9 months, but the outlook further out is highly uncertain – and Turkey’s track record on interest rates does not suggest that we should take things for granted,” Tatha Ghose, FX and EM analyst at Commerzbank wrote in a note.

Investors will be watching a central bank meeting later in the week for more clues.

Most central European currencies fell against the euro, with focus turning to a European Central Bank meeting later in the week.

Emerging-market stocks retreated, with the MSCI’s index of equities dropping 0.2% after reaching a record high on Friday. The prospect of steady stimulus measures and easy monetary policy has kept the outlook for equities upbeat.

For GRAPHIC on emerging market FX performance in 2021, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see https://tmsnrt.rs/2OusNdX

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For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Reporting by Ambar Warrick in Bengaluru, editing by Larry King)

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