LONDON Aug 29 Military tensions and a worsening
economy put Russian dollar-denominated stocks on track on Friday
for a 4 percent loss on the month, bucking broader emerging
equities that were poised for their seventh straight month of
Russia stands accused of sending troops into Ukraine to
shore up a separatist rebellion that had appeared to be ebbing.
That has sharply escalated the five-month conflict over eastern
Ukraine and raised the spectre of fresh sanctions from the West.
"If you look at Russia from a bottom-up perspective, it's
gone from bad to worse," Benoit Anne, head of emerging markets
strategy at Societe Generale, said, although "the crisis has
struggled to take it to the status of a global markets event."
The rouble fell 0.35 percent against the dollar to touch a
fresh record low while dollar-denominated Moscow stocks
hit a two-week low and were down 0.7 percent after Thursday's 2
percent fall, eyeing losses for the week of 4 percent.
Russian dollar bonds too have slipped in price since news of
the military incursion, with yield spreads over U.S. Treasuries
widening 20 basis points over the week.
Russian 10-year rouble debt yields rose 11 bps after a
35-bps jump on Thursday.
Broader emerging markets have remained relatively unruffled
however, with MSCI's emerging equity index trading just off
Thursday's three-year highs, helped by a rise in
Chinese stocks and by a fall in safe-haven U.S. 10-year
The emerging stocks index is heading for its seventh
straight month of gains and is up 8.5 percent year-to-date.
Turkish stocks rose 0.7 percent to three-week
highs, after data showing a narrower than expected trade deficit
Emerging European currencies were steady to slightly firmer.
The zloty, seen as a proxy for contagion to
central Europe from the Ukraine crisis, hit five-month lows
early on Friday. But it trimmed losses following data showing
growth up a stronger-than-expected 3.3 percent year-on-year in
the second quarter.
The rand, which Anne said was benefiting from safe
haven status due to its distance from Ukraine, reached an 11-day
high. But South African stocks hit 2-1/2 week lows.
For GRAPHIC on emerging market FX performance 2014, see link.reuters.com/jus35t
For GRAPHIC on MSCI emerging index performance 2014, see link.reuters.com/weh36s
For GRAPHIC on MSCI emerging Europe performance 2014, see link.reuters.com/jun28s
For GRAPHIC on MSCI frontier index performance 2014, see link.reuters.com/zyh97s
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see )
(Editing by Mark Heinrich)