LONDON, Jan 11 (Reuters) - Emerging stocks fell for a third day and many currencies were under pressure, weighed down by a stronger dollar and jitters over trade protectionism as markets digested the recent rally.
MSCI's emerging market benchmark declined 0.3 percent in a third day of falls, pulled lower by heavyweight South Korea where stocks fell 0.5 percent while bourses from Turkey to South Africa chalked up losses.
Markets were jittery following a Reuters report saying Canada increasingly believes U.S. President Donald Trump will soon announce his intention to withdraw from the North American Free Trade Agreement (NAFTA) treaty.
Nerves had also been frayed by a report that China was considering slowing or halting purchases of U.S. Treasury bonds, which sent U.S. yields higher, though Beijing's foreign exchange regulator said the report may be based on erroneous information.
Tom Hainlin, global investment strategist at Ascent Private Capital Management, said the move in Treasury yields was not expected to hit emerging markets, which had started to look "aggressive, if not overbought" following a stellar start to the year.
"This seems like a natural consolidation," he said, adding that fundamentals still looked good and he expected a decent 2018 in China, the biggest emerging market country.
"As you move into 2018 you are seeing record upgrades on earnings estimates so that's a pretty solid base for emerging market investors," he said.
Emerging currencies painted a mixed picture on the day against a stronger dollar.
South Africa's rand weakened 0.3 percent in a second day of losses after the new leadership of the ruling ANC said on Wednesday it did not discuss President Jacob Zuma's future, disappointing investors who hoped the party would seek to remove him from power.
Mexico's peso weakened for a fourth straight session over concerns for the future of NAFTA.
But Russia's rouble eked out small gains, propped up by rising crude oil prices while the Thai baht hit a 3-1/2 year high.
However, currencies such as the yuan, the rand, the rouble, the peso and Turkey's lira were all on track for weekly losses following a multi-week rally.
In emerging Europe, Serbia's central bank was expected to keep rates on hold at 3.5 percent thanks to a strong currency and tame inflation.
Hungary's central bank chief said interest rates must stay at a record low of 0.9 percent to reach the central bank's 3 percent target by mid-2019.
Budapest also announced it would hold its 2018 parliamentary election on April 8. Prime Minister Viktor Orban's ruling Fidesz party holds a comfortable lead over the main opposition according to the latest polls.
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For TURKISH market report, see
For RUSSIAN market report, see) Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg
Morgan Stanley Emrg Mkt Indx 1194.90 -2.63 -0.22 +3.15
Czech Rep 1102.55 +0.82 +0.07 +2.26
Poland 2511.52 +0.25 +0.01 +2.04
Hungary 39608.15 -43.08 -0.11 +0.59
Romania 8091.05 +56.20 +0.70 +4.35
Greece 835.37 -0.91 -0.11 +4.11
Russia 1237.30 +2.66 +0.22 +7.18
South Africa 52757.84 -410.12 -0.77 +0.43
Turkey 13196.54 -392.91 -0.35 -1.85
China 3425.57 +3.74 +0.11 +3.58
India 34499.84 +66.77 +0.19 +1.30
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 25.53 25.55 +0.08 -0.02
Poland 4.17 4.17 -0.01 +0.02
Hungary 308.86 309.19 +0.11 +0.54
Romania 4.63 4.64 +0.05 +0.91
Serbia 118.64 118.70 +0.05 -0.20
Russia 56.99 57.04 +0.09 +1.17
Kazakhstan 330.06 330.37 +0.09 +0.83
Ukraine 28.46 28.34 -0.43 -1.11
South Africa 12.46 12.43 -0.24 -0.82
Kenya 103.05 103.00 -0.05 +0.05
Israel 3.42 3.43 +0.07 +1.60
Turkey 3.80 3.80 -0.06 -0.26
China 6.51 6.51 -0.02 -0.01
India 63.66 63.62 -0.06 +0.27
Brazil 3.23 3.23 +0.00 +2.61
Mexico 19.31 19.29 -0.14 +1.73
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 300 0 .14 8 07.38 1
All data taken from Reuters at 09:57 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT.
Reporting by Karin Strohecker, additional reporting by Sujata Rao, graphic by Claire Milhench; Editing by Gareth Jones