LONDON Jan 7 Emerging equities hit a four-month low on Tuesday as weaker-than-expected U.S. data hit export-sensitive Asia while a stronger dollar weighed on the Turkish lira and other currencies reliant on capital inflows.
The MSCI's broad emerging equity index fell 0.2 percent , losing ground for a fifth straight day and on track for one of its worst five-day performances since June.
Asia led the losses as weak local currencies weighed on the Indonesian and Philippine bourses, while emerging Europe eked out some gains.
The Turkish lira fell 0.4 percent to 2.18 per dollar, near the previous day's record low, while two-year bond yields held above 10 percent, near the previous day's one-year high.
On top of worries over the Federal Reserve's stimulus withdrawal, a wide-ranging corruption investigation is clouding the country's political outlook.
"The political in-fighting is continuing, which is not good for the markets," said Thu Lan Nguyen, emerging markets strategist at Commerzbank in Frankfurt.
The country's shares have stabilised however, rising 0.2 percent.
Turkish Finance Minister Mehmet Simsek warned on Tuesday that economic growth may be affected this year due to "uncertainty" and lira weakness could push up inflation.
Emerging market assets have been under pressure as investors fret that moves by the Federal Reserve to withdraw monetary stimulus from this month could drain capital away from countries in most need of external funding.
Disappointing U.S. and Chinese economic data also raised concerns about economic growth in export-reliant countries. A report released on Tuesday showed business activity in emerging markets expanded at a lower rate in December, hit particularly by a slowdown in service sector growth.
Polish stocks fell 2.2 percent while the zloty lost 0.1 percent against the euro.
This month's data showed Polish manufacturing activity unexpectedly fell for the first time in eight months in December, suggesting a slightly slower pace of expansion for central and eastern Europe's largest economy.
In Asia, the Philippine peso hit its weakest level since September 2010 at 44.851 per dollar after annual inflation in December raced to a two-year high.
The Indonesian rupiah lost 0.7 percent to 12,255 per dollar, edging closer to a five-year trough set on Dec. 27.
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