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EMERGING MARKETS-FX hits 2-month low, stocks slammed by Chinese tech crackdown

* Tencent, Alibaba and Baidu down over 4% each

* China largest component of MSCI EM stocks index

* Polish c.bank meeting due later in the day

* Russia’s rouble leads EMEA FX losses

July 8 (Reuters) - Emerging market currencies sank to a two-month low on Thursday on growing worries over a slowing post-COVID economic recovery, while stocks tumbled more than 1.5% on jitters over a Chinese crackdown on technology firms.

MSCI’s index of emerging market currencies dropped 0.3% to a two-month low of 1,721.92 points, while the dollar hovered around three-month highs after minutes of the Federal Reserve’s recent meeting affirmed the bank’s timeline to start tightening policy.

Russia’s rouble was the worst performing currency in Europe, the Middle East and Africa regions, sinking nearly 1% to 75.2372- its lowest level to the dollar in two months.

South Africa’s rand fell 0.6%, while Turkey’s lira fell 0.3%.

In China, fears of a slowing post-COVID economic recovery were heightened after the country’s cabinet said authorities would use timely cuts in banks’ reserve requirement ratios (RRR) to support the economy.

The yuan fell 0.1% to the dollar, while yield on Chinese 10-year sovereign bonds posted its sharpest fall in nearly a year.

“The signalling of a potential easing in the RRR shows that policymakers are concerned with ensuring sufficient liquidity reaches the economy,” said Sacha Tihanyi, head of emerging markets strategy at TD Securities.

“We would interpret today’s headlines as not suggesting substantial further monetary easing as the economy moderates, but targeted support for the more vulnerable sectors.”

Spiking cases of the delta variant of the coronavirus across the globe have also soured sentiment over a recovery. Emerging markets have been on a downturn in recent weeks due to waning risk appetite.

MSCI’s index of emerging market stocks sank 1.5% to a more-than seven-week low. Heavyweight Chinese and Hong Kong stocks were sold off in droves after the government ordered ride-hailing app Didi Global to be removed from mobile app stores, and fined major tech firms.

Tencent and Alibaba Group, which are the second and third largest emerging market stocks, sank more than 4% each, while Hong Kong shares of tech major Baidu Inc dropped 4.5%.

EMEA stocks also retreated, with South African stocks leading declines with a 1.5% drop. Shares of tech firm Naspers Ltd, which holds a sizeable stake in Tencent, fell 2.5%.

In central Europe, Poland’s zloty fell 0.2% to the euro ahead of a central bank meeting later in the day. The bank is widely expected to hold interest rates slightly above zero, in contrast to its peers in Hungary and the Czech Republic, who recently began hiking rates.

Losses in Hungary’s forint were muted after stronger-than-expected inflation furthered the case for tighter monetary policy.

For GRAPHIC on emerging market FX performance in 2021, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see tmsnrt.rs/2OusNdX

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For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see

Reporting by Ambar Warrick Editing by Raissa Kasolowsky

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