Stocks pause after four-day rally

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Jan 13 (Reuters) - An index of emerging market shares steadied on Thursday after rallying higher for four straight sessions as China stocks slid, while most currencies firmed with the dollar in the red after U.S. monetary policy stance was seen as largely unchanged.

Hawkish bets rose over the past few days, but in-line U.S. December inflation and the Federal Reserve Chair maintaining his stance sent the dollar and U.S. Treasury yields lower, even as the case for a March rate hike strengthened.

This aided moves into riskier assets, sending the emerging markets currency index (.MIEM00000CUS) to over four-month highs in its fifth straight days of gains.

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Russia's rouble gained after a day's pause on Wednesday. U.S. is largely settled on Russia sanctions if it invades Ukraine, officials said, with measures in line with U.S. President Joe Biden's vow to hit Russia with severe economic consequences.

Russia said the situation was "very dangerous" and the way forward was unclear after talks with NATO. Moscow is set to hold talks with the Organisation for Security and Cooperation in Europe on Thursday.

"We recently changed our base-case that geopolitical risk would only create periodic volatility for rouble assets. We now anticipate a steady higher risk premium leading into Russia's 2024 presidential electoral cycle, and will be adjusting our USD-RUB forecasts accordingly," said Tatha Ghose, FX and EM analyst with Commerzbank.

China's yuan briefly touched a more than two-week high although easing inflation and rising COVID-19 clusters mean there are growing expectations of another central bank rate cut.

Turkey's lira skid 2% against the greenback on monetary policy worries, looking to give back Wednesday's 4% surge. COVID-19 cases hit a daily record of almost 78,000 in the country.

Data on Thursday showed, Turkish industrial production leaped 11.4% year-on-year in November, the highest rate of growth in three months and marking the 17th consecutive month of expansion. read more

MSCI's index of emerging shares (.MSCIEF) was flat as losses in China, South Korea, Russia and South Africa were offset by gains elsewhere.

China property firms continued to be dogged with default worries, with Shimao (0813.HK) and Yuzhou (1628.HK) sliding 9.4% and 6.9%, respectively, while the market is also waiting to see whether China Evergrande Group (3333.HK) gets onshore bondholders to agree to an extension.

EM corporate debt issuance is heading for record week as firms rush to get in before rates rise further.

For GRAPHIC on emerging market FX performance in 2021, see http://tmsnrt.rs/2egbfVh

For GRAPHIC on MSCI emerging index performance in 2021, see https://tmsnrt.rs/2OusNdX

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Reporting by Susan Mathew in Bengaluru; Editing by Shounak Dasgupta

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