* Emerging equities fall 0.46 percent
* Weak German PMI also weighs
* Hungarian 5-year CDS widen 17 bps
* Turkish lira rises 0.2 pct
By Philip Baillie
LONDON, March 22 (Reuters) - Emerging stocks fell on
Thursday to two-week lows as concerns over a slowdown in Chinese
and German growth hit riskier assets, while a rumbling dispute
between Budapest and the IMF pushed up Hungary's debt insurance
costs.
The MSCI emerging equities index fell 0.46 percent
following weaker than expected sentiment data from China. The
HSBC flash PMI, the earliest indicator of China's industrial
activity, fell to 48.1 in March from February's four-month high
of 49.6, with new orders sinking to a four-month low.
"At the core of everything today is China. Clearly the data
is very soft and that's raising concerns over where China is
going in terms of growth and what policies will be implemented,"
said Lars Christensen, chief emerging markets analyst at Danske
Bank in Copenhagen.
"If (a hard landing) materialises, emerging markets will
take a hit from the direct growth impact as well as from
commodity prices correcting downwards."
Emerging assets were also pressured by equivalent data from
Germany showing the country's manufacturing sector shrank on the
back of falling new orders, raising concern over its resilience
to the euro zone crisis.
Share prices dropped across central and eastern Europe led
by a fall in benchmark indices in Russia dropping 1.34
percent, Poland 1.26 percent and Hungary with a
0.8 percent drop
Emerging currencies also took a hit. By 0928 GMT, the zloty
, the Czech crown and the Hungarian forint
each shed more than half a percent to the euro.
HUNGARIAN TALKS
Hungary is working to resolve a conflict with the European
Union over legislation which has blocked the start of talks on
aid, and the country's five-year credit default swaps (CDS) rose
by 17 basis points to 535 bps, according to Markit.
The International Monetary Fund quashed rumours on Wednesday
it would send a team to Hungary in April.
Russian CDS widened by 6 basis points a day after it drew
weak demand at a sale of seven-year bonds at a weekly treasury
auction.
Moscow embarked on an international investor roadshow
earlier this week and is likely to issue 10- and 20-year dollar
bonds, banking and fund manager sources told Reuters on
Wednesday.
In South Africa, where markets reopened after a national
holiday, the rand was down against the dollar, losing
0.75 percent after a lower than expected inflation reading.
"(The) immediate market reaction is likely to be that this
allows the (central bank) to keep interest rates on hold a while
longer, despite the more hawkish comments we've had from
Governor Marcus recently," Standard Chartered Bank told clients
in a research note.
The Turkish lira rose for the second day in a row,
gaining 0.2 percent against the dollar.
"Given the current level of (the lira), the growing risk of
a global economic slowdown and the sticky inflation outlook,
risks are skewed towards a more hawkish (central bank) bias,"
JPMorgan analysts said in a note.
(Addditional reporting by Sujata Rao; Editing by John
Stonestreet)
© Thomson Reuters 2012 All rights reserved
