(Official Markit correction of Bulgaria 5-yr CDS rise, paragraph 9)
LONDON, March 4 Emerging stocks fell 1 percent on Monday, hit by a 4 percent slump in China, while fears for the Hungarian central bank's independence pushed the forint down half a percent.
The latter also fuelled a rise in Hungarian debt insurance costs.
Fresh curbs on the property sector, with a stricter implementation of capital gains tax and higher loan rates for second-home buyers, saw Chinese shares post their worst daily losses since November 2010 .
MSCI's emerging equity index, of which China is the biggest component, fell 1 percent. Sentiment also was knocked by political stalemate in Italy and the United States, where politicians failed to avert huge spending cuts from being triggered.
The forint was hit by concern that changes at the central bank would lead to major monetary policy easing, particularly with the appointment of Economy Minister Gyorgy Matolcsy to be chief..
Hungarian 5-year credit default swaps rose 9 basis points to 4-1/2 month highs of 322 bps, and have risen 50 bps since the start of 2013, according to Markit data.
Citi said forward rate agreements now price Hungarian interest rates at 4.25-4.5 percent, from 5.25 percent now.
"The big reshuffle at the core of the MPC (monetary policy committee) will open the way for potential unorthodox measures on the monetary policy front, along with some continuation in the easing cycle," they said.
In neighbouring Bulgaria, 5-year CDS rose 4 bps to 135 bps, the highest since October, on fears of political limbo after violent protests toppled the government.
South Africa's rand traded at one-month lows while stocks fell 0.7 percent, led by miners which suffered from fears of a manufacturing slowdown in China. Long-dated bonds were hit by higher debt issuance plans outlined in last week's budget, with 10-year yields at one-month highs.
Egyptian CDS were at 610 bps, the highest since June, while the currency touched a new record low against the dollar.
(Reporting by Sujata Rao. Editing by Jeremy Gaunt.)