November 11, 2019 / 10:36 AM / in a month

EMERGING MARKETS-EM shares retreat as Hong Kong unrest hits sentiment

* HK stocks posts biggest one-day fall in 3 months

* MSCI EM index down 1.2%

* U.S.-China deal has "got to be the right deal" - Trump

* Turkey's lira slips as threat of U.S. sanctions loom

By Susan Mathew

Nov 11 (Reuters) - An escalation of political unrest in Hong Kong drove its shares to their biggest one-day fall in three months on Monday, while uncertainty over the U.S.-China trade deal also clouded sentiment in emerging markets.

Hong Kong shares shed 2.6% to lead declines among emerging markets stocks, after police shot and wounded a protester, as the Chinese-ruled territory spiralled into rare working-hours violence in its 24th straight week of pro-democracy unrest.

"(The) market fears that there will be more active intervention from China in Hong Kong, and that could get some pushback from the U.S. and risk playing into the trade negotiations, which are much more important for the global economy," said Jakob Christensen, head of EM research at Danske Bank.

Other Asian stock markets were also lower, with poor auto sales and producer prices from China underlining a slowdown in growth from a 16-month long trade war between the world's top economies.

Shares from mainland China to South Africa fell between 0.1% and 1.8%. MSCI's index of emerging market shares was down 1.2% and was on course for its biggest one-day loss since Aug. 26, after five straight weeks of gains.

A potential rollback in trade tariffs had supported sentiment last week until U.S. President Donald Trump contradicted optimistic reports on Friday. He said on Saturday that Washington would only make a deal with Beijing if it was the "right deal" for America.

"Markets are now more or less priced for quite a high likelihood of a "phase one" (trade) deal. So now we need concrete evidence (of) a timeline on reaching and finalizing the deal," Danske's Christensen said.

Most developing world currencies lost ground against the U.S. dollar, which held steady near one-month highs.

The trade-reliant South Korean won was 0.6% lower, leading losses among Asian currencies, while the South African rand slipped 0.1%.

Turkey's lira fell to its lowest in 2-1/2 weeks to 5.77 to the dollar, extending losses this month on looming threats of U.S. sanctions over its offensive into Syria.

Over the weekend, White House National Security Adviser Robert O'Brien said the United States could impose sanctions on Ankara if it did not "get rid" of Russian missile systems, which are incompatible with NATO defences.

For a GRAPHIC on emerging market FX performance 2019, see tmsnrt.rs/2egbfVh For a GRAPHIC on MSCI emerging index performance 2019, see tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Reporting by Susan Mathew in Bengaluru;)

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