May 13, 2019 / 9:29 AM / a year ago

EMERGING MARKETS-Chinese shares drag stocks lower as Sino-U.S. rift deepens

* China says it will not yield on core issues

* Currencies get battered, South Korea's won falls 1%

* Turkey's lira falls nearly 2% on dour economic data

* Moscow stocks buck trend, climb higher

By Agamoni Ghosh

May 13 (Reuters) - Chinese shares pulled emerging-market stocks lower on Monday after hopes for an end to a trade war between the United States and China were dashed. MSCI's index for emerging-market stocks fell over half a percent hovering around three-month lows.

The United States and China appeared deadlocked on Sunday. Washington demanded changes to Chinese law; Beijing said it would not swallow any "bitter fruit" that harmed its interests. U.S. President Donald Trump then ordered tariffs be imposed on the rest of China's exports to the United States.

Mainland Chinese shares slumped, with the Shanghai composite and the blue-chip indices shedding as much as 1.2% and 1.6%, respectively. The Hang Seng index was shut for a public holiday.

"We expect heightened volatility for Chinese equities over the near term and Beijing's policy response remains key," UBS analysts said in a note. "In wake of higher tariffs, China may step up with more fiscal easing and monetary measures."

Most Asian indices fell. South Korea's Kospi dropped to its lowest since early January.

Stocks in Moscow and Johannesburg bucked the trend, climbing 0.2% to 0.4%.

Emerging-market currencies suffered from the trade headlines. The Chinese yuan reached a four-month low and the trade-sensitive South Korean won fell more than 1%.

The rand snapped a four-day winning streak after South Africa's ruling African National Congress posted its worst-ever performance in the latest general election.

Turkey's lira fell almost 2% after data for March showed the country's current account deficit narrowed much less than forecast.

Finance Minister Berat Albayrak said the Turkish government would soon announce a new loan package to support manufacturers and exporters.

JP Morgan said it had trimmed its emerging-markets risk for the second time in as many months on Monday following the set-back in U.S-China trade talks.

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Reporting by Agamoni Ghosh in Bengaluru, editing by Larry King)

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