Stock market report. 3d illustration

Oct 13 (Reuters) – Risk sentiment across most emerging markets soured on Friday, with stocks and currencies tumbling as evidence of China’s wobbly economic recovery depressed sentiment and concerns about U.S. interest rates resurfaced.

MSCI’s index tracking emerging markets equities .MSCIEF slid 1.0%, with China’s blue chip index .CSI300 and Hong Kong’s Hang Seng .HIS dropping 1.1% and 2.3%, respectively.

Data showed consumer prices in China faltered in September, showing persistent deflationary pressures, though a narrowing trade slump offered some hope of stabilisation in the top consumer.

“Trade data suggests the situation is improving, though soft developed market demand underscores that China may need to rely more on domestic demand to sustain its recovery,” UBS analysts wrote in a note.

“We think a bottom is near as policy support kicks in and more signs suggest a turn in the economy.”

Emerging markets currencies .MIEM00000CUS fell 0.2% by 8:47 GMT against the dollar.

Worries that the U.S. Federal Reserve will stay restrictive on monetary policy for longer than previously expected were also an overhang following a hotter-than-expected headline inflation number on Thursday.


A rise in crude prices on Friday clouded the outlook for inflation while traders were also nervous as the conflict in Middle East raged on for another day ahead of Israel’s credit rating review by Moody’s.

Israel Bonds, the Israel government’s vehicle for diaspora bonds, said the country raised $200 million from diaspora bond sales since the conflict began, while iShares MSCI Israel exchange-traded fund (EIS) EIS.N suffered substantial outflows this week after its price hit a three-year low.

But currencies and stocks in the region remain on course for their first weekly gain in four weeks, helped by dovish comments from U.S. policymakers in the days leading up to the U.S. inflation report.

Emerging markets-focused fund manager AshmoreASHM.L said assets under management fell in the third quarter, with net outflows of $2.9 billion, amid subdued market conditions due to weaker China economic data and high interest rates.

In central and eastern Europe, Poland’s zloty PLN= inched lower against the euro. Final data confirmed September consumer prices were at 8.2% year-on-year.

Romania’s leu RON= shed 0.1% and Czech’s crown CZK= added 0.2% ahead of an S&P Global’s credit rating review.


(Reporting by Johann M Cherian and Amruta Khandekar in Bengaluru; Editing by Krishna Chandra Eluri)