LONDON Nov 13 Emerging stocks hit two-month lows on Tuesday on fears Greece would not receive an aid tranche before an end-week debt deadline, while rate cut signals pushed the zloty and lira to multi-week lows.
International lenders are wrangling over disbursing the next tranche of Greek aid that the country hoped to use to refinance 5 billion euros of debt by Friday..
"We are again left with the Greece story weighing on markets. Basically the momentum for emerging markets is externally driven," said Murat Toprak, emerging markets strategist at HSBC in London.
"On currencies we have weakness on back of the risk-off mood and on back of policy measures. Turkey is a classic example of a country that doesn't want to see its currency strengthening," he said, citing the dovish Turkish central bank comments on Monday.
Emerging shares fell almost 1 percent, led by Shanghai which slumped 1.5 percent to seven-week lows after state media reported that curbs on housing markets would stay.
Moscow stocks slumped 1.2 percent as crude prices fell under $109 a barrel. The rouble touched two-month lows versus the dollar, hit also by weak growth data that makes more central bank rate rises less likely.
The Turkish lira fell 0.3 percent, adding to Monday's 0.6 percent losses after Governor Erdem Basci threatened a rate cut. Bonds were steady after yields hit record lows on Monday.
The Polish zloty likewise touched new two-month lows after a rate cut this month and signs of more to come. The Czech crown was flat after three weeks of losses.
David Sykora, a trader at CSOB bank in Prague said long euro versus crown was the preferred trade.
"I can hardly imagine a reason to hold the crown. Rates are at zero, the central bank has said it wants the crown to be weak and data coming from the economy is rather gloomy," he said.