October 23, 2019 / 9:02 AM / 8 months ago

EMERGING MARKETS-Brexit weighs on stocks; Russia deal lifts Turkish lira

* UK parliament rejects swift decision on Brexit bill

* Hong Kong legislature withdraws extradition bill

* Russia, Turkey agree to remove Kurdish YPG from Syria border

* South African inflation slows in September; rand down

By Susan Mathew

Oct 23 (Reuters) - Emerging-market shares retreated from their highest in more than two months on Wednesday as Britain's chaotic efforts to leave the European Union weakened demand for riskier assets.

MSCI's index of emerging-market stocks fell 0.4% as Brexit worries overshadowed hopes for progress in U.S.-China trade relations.

Shares in mainland China , Taiwan and South Korea all fell. So did South African, Russian and Polish stocks.

On Tuesday evening, British lawmakers voted in principle for Prime Minister Boris Johnson's Brexit agreement. But then they defeated his attempt to rush the legislation through this week, making it virtually impossible for Britain to leave the EU by next Thursday, as Johnson had promised.

The EU is now considering extending the Oct. 31 Brexit deadline, probably until January. In that event, Johnson's advisers said, the only option was to call a snap election .

"The series of proposed amendments to the Brexit bill ... suggests that the path ahead is far from straightforward," Mihuzo Bank in Singapore said in a client note.

Hong Kong shares lost 0.8%. The Hong Kong legislature formally withdrew an extradition bill that had prompted months of violent protests, but the move was unlikely to end the unrest, since it met just one of the protesters' five demands .

The Financial Times reported that China was planning to replace Hong Kong's leader, Carrie Lam, with an "interim" chief executive.

"If there is a new CEO then he/she will have to be very tough on dealing with violence on the one hand and possibly setting up independent investigations on police use of force on the other hand," said ING's Greater China economist, Iris Pang.

"But even if this is done, we doubt that the protests will stop altogether. The economy still has a long way to go before it can be recovered."

The Turkish lira gained 0.4% after Turkey and Russia agreed to remove Kurdish YPG militia fighters and their weapons from the Turkey-Syria border strip. Turkey said there was no need for further attacks in northern Syria.

South Africa's rand slipped for the first time in four days after data showed headline consumer inflation slowed in September from a year ago.

In Russia, the central bank is expected to cut its key rate as much as 50 basis points on Friday, a Reuters poll showed. The rouble was down 0.15%.

For GRAPHIC on emerging market FX performance 2019, see tmsnrt.rs/2egbfVh For 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; editing by Larry King)

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