* Turkey’s lira breaks nine-session winning streak
* Stimulus hopes lift South Korean and Indian shares
* China’s central bank holds lending rate steady
* Strong euro keeps CEE currencies in tight range
May 20 (Reuters) - Emerging market currencies snapped a three-day winning streak on Wednesday as concerns about a deep post-pandemic recession returned to the fore after a report cast doubts on the effectiveness of a potential coronavirus vaccine.
Stock markets were mixed. Chinese mainland stocks fell 0.5%, while optimism about stimulus measures lifted indexes in South Korea and India , with the former climbing to 2-1/2-month highs.
Turkish shares extended gains for a third session running, stocks in Russia and Poland made healthy gains but bourses in South Africa and Hungary fell.
MSCI’s index of emerging market shares rose 0.3%.
A day after markets rallied on hopes of a vaccine for COVID-19, a report from medical news website STAT questioned the lack of details in U.S. drugmaker Moderna’s early stage study of the vaccine, raising doubts about its effectiveness.
“This caused a pullback in risk markets ... as we were reminded of the reality of the savage hit to the economy and to earnings,” Deutsch Bank strategists said in a note.
Restrictions to economic activity in many emerging market countries still remained as the number of new cases surged. Russia surpassed 300,000 cases and preliminary data showed its economic growth slowed in the first quarter and is expected to contract in coming quarters.
An index of EM currencies fell 0.1%.
Turkey’s lira broke a nine-day winning streak, weakening 0.3% despite the central bank tripling its swap lines to Qatar to $15 billion as the country scrambles to shore up its finances. Updates on talks with other countries are awaited.
The currency’s winning streak came after it hit all-time lows on concerns that the economic fallout from the pandemic could increase foreign exchange liabilities and plunge the lira into a second crisis in two years.
Central bank rate decisions in Turkey and South Africa are due on Thursday with the consensus forecasts being cuts of 100 basis points and 50 basis points, respectively.
Russia’s rouble was last up 0.4% in volatile trade as oil prices struggled to hold onto gains.
China’s yuan fell 0.1%. The central bank held its lending rate steady on Wednesday though analysts believe this could be just a brief pause in easing efforts.
Central and Eastern European currencies made minor moves against the euro as the single currency rallied on a Franco-German proposal for a common fund that could move Europe closer to a fiscal union.
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