November 5, 2018 / 9:49 AM / 10 months ago

EMERGING MARKETS-Emerging stocks falter, rising inflation hits Turkish lira

* Mainland China stocks end four-day rally

* Turkey’s lira down after surging inflation data

By Susan Mathew

Nov 5 (Reuters) - Emerging market stocks fell for the first time in four days on Monday, hit by the prospect of faster rises in U.S. interest rates and uncertainty around the China-U.S. trade war, while data showing rising inflation hit the Turkish lira.

U.S. jobs numbers on Friday bolstered expectations of another hike in rates in December, while hopes of a trade agreement between China and U.S. were quashed by comments from the White House.

“The payroll data is a cause as (there is) anticipation of another Fed hike in the near-term and (that) may have weighed in on some emerging market currencies,” said William Jackson, chief emerging markets economist at Capital Economics.

The MSCI index of emerging market stocks fell 0.9 percent after gaining more than 6 percent over the last four sessions.

“We saw some very sharp rises in emerging market assets towards the end of last week so this may simply be a reversal of that,” Jackson added.

Results of mid-term elections in the United States on Tuesday may play a role this week, with opinion polls showing a strong chance the Democratic Party will win control of the House of Representatives. That would damage the prospect of further moves by President Donald Trump’s Republican Party to follow this year’s tax windfall for U.S. big business.

Mainland China stocks fell after four days of gains, with a private survey showing China’s services sector grew at its slowest pace in over a year last month, suggesting a further loss in economic momentum.

Hong Kong’s benchmark fell more than 2 percent and the yuan weakened by half a percent.

The Turkish lira fell 0.8 percent against a steady dollar after data showed annual inflation soared to 25 percent in October, its highest in 15 years.

Rating agency Moody’s said recent tax cuts announced in the country are credit negative and risk rekindling selling pressure on the lira, adding to the currency’s woes.

Stocks on Istanbul’s benchmark index rose 0.3 percent, helped by a 5 percent rise in shares of commercial bank Turkiye Halk Bankasi AS, which took the Turkish bank index 2 percent higher.

President Tayyip Erdogan said on Saturday he and Trump had discussed the bank as it faces the possibility of U.S. fines for helping Iran evade U.S. sanctions.

South African rand slipped 0.5 percent after more evidence of the economic pressure with data showing private sector activity shrank at the fastest rate in over four years in October.

Among European currencies, the Hungarian forint declined, in line with other European and emerging market peers. But, stocks on the Budapest index rose 0.8 percent, with data showing seasonally-adjusted Purchasing Managers’ Index rose more than the month before in October.

Russia's rouble was little changed with stock markets closed for a local holiday. For GRAPHIC on emerging market FX performance 2018, see For GRAPHIC on MSCI emerging index performance 2018, see

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Reporting by Susan Mathew and Agamoni Ghosh in Bengaluru; Editing by Richard Balmforth)

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