LONDON, Jan 14 (Reuters) - The rouble hit a 4-1/2 year low against its dollar-euro basket on Tuesday after Russia's central bank said it would scale back its forex interventions, while the lira tested a new record low as Turkey's current account deficit widened further.
Broader emerging markets also slipped, taking their cue from a firmer dollar and Wall Street's 1.2 percent decline late on Monday, with MSCI's main emerging equity index down half a percent.
Emerging markets have been under pressure for more than six months on expectations - which become reality this month - that the Federal Reserve will scale back its bond-buying programme, encouraging investors to return home.
"A lot of foot-loose institutional capital has gone into emerging markets, and we're not sure that has come out yet," Kevin Gardner, European CIO at Barclays Wealth, told a briefing.
"Markets have cheapened up, but we are not yet too bullish on EM stocks."
Russian stocks fell more than 1 percent, but losses in the broader index were tempered by gains in its largest constituent, China. Mainland Chinese shares broke a four-day fall to end 0.9 percent higher.
The rouble hit 4-1/2 year lows against its dollar-euro basket and four-month lows against the dollar after the central bank said on Monday it would end 'targeted' interventions on the currency market as part of a strategic shift towards letting the rouble float freely.
The reduction to zero of its interventions, which had been set at $60 million per day, will increase the flexibility of the exchange rate corridor used by the central bank and reduce its presence on the market.
"As rouble volatility rises, the spot is likely to weaken at current interest rate levels," Commerzbank analysts wrote in a client note.
The lira fell more than half a percent to the dollar and Turkish stocks dropped more than 1 percent following data showing the current account deficit widened to $3.94 billion in November. The widening came in below expectations, however.
"The good news is that the deteriorating trend has stopped, the bad news is that the deficit remains very large," said Tim Ash, emerging markets strategist at Standard Bank, in a client note.
Egyptian stocks jumped nearly 2 percent before trimming gains as voting began in a constitutional referendum which is likely to lead to a presidential bid by army chief General Abdel Fattah al-Sisi.
Egypt's stock market has soared nearly 5 percent in the past few trading sessions to their highest since May 2010.
The Ukrainian hryvnia hit its lowest in more than four years following weekend anti-government protests
Emerging sovereign debt spreads edged out by 1 basis point to 341 bps over U.S. Treasuries, with Romania planning 10- and 30-year dollar bonds, according to Thomson Reuters news service IFR.
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see )