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EM stocks at 15-month low, currencies rebound

Lingering trade war worries saw emerging-market stocks whither to a fresh 15-month low on Tuesday, though a tepid dollar gave currencies a chance to recover with Russia's rouble chalking up healthy gains before a central bank meeting later this week.
MSCI's emerging-market index fell 0.5 percent, its ninth decline in the past 10 sessions. The brunt of the losses came from tech stocks across developing markets, which slipped more than half a percent. Export heavyweight Hong Kong lost 1 percent, in bear market territory after losing more than 21 percent since its January peak.
Investor nerves have been raw since US President Donald Trump said he was ready to impose tariffs on virtually all Chinese imports into the United States, raising the chances that the trade row between the world's top two economies would hit global growth. China has vowed to retaliate.
However, emerging-market currencies enjoyed a bounce back against the dollar.
Russia's rouble strengthened around 1 percent to snap a six-day losing streak over concerns that Moscow could face fresh US sanctions. The central bank was expected to leave rates unchanged on Friday but might flag a future rate hike .
However, the currency still hit a 19-month weak spot in early trading, briefly crashing through 70 to the dollar again. The rouble has been hit hard since early August by the threat of more US sanctions, particularly on holdings of Russian government bonds.
"Most of the pressure goes from currency purchases by investors who are selling Russian OFZ bonds, driven by the expectations of US sanctions,"SEB analysts wrote in a note to clients.
"The volatile and emotional market driven by risk-off fears and OFZ sell-off can push RUB even further,"SEB said, adding it expected the currency to trade in a range of 69.50-71.50 to the dollar over the next week.
South Africa's rand matched those gains, advancing for a fourth straight session. However, local benchmark sovereign bond yields remain well above 9 percent as investors eyed the risk of the country seeing its local credit rating downgraded, a move that could prompt massive outflows.
Turkey's lira posted small gains as investors prepared for a central bank meeting on Thursday. Policymakers are expected to raise interest rates to combat spiralling inflation.