EMERGING MARKETS-Dollar triggers losses; rand falls

                                
 * Emerging assets sink, underperform global peers
                                
 * Turkish lira recovers, South African rand falls
                                
 * Weak commodities snap Russian winning streak
                                
 
                                
 By Sebastian Tong
                                
 LONDON, Oct 27 (Reuters) - A dollar recovery triggered an
emerging-markets rout on Tuesday as investors grew concerned
about the scaling back of economic stimulus while an oil-price
retreat snapped the Russian rouble's six-day winning streak
against its currency basket.
                                
 Turkey's lira recovered after Monday's selloff, emboldened
by brightening prospects of a ratings upgrade, and South
Africa's rand widened losses after the country's finance
minister said the government was concerned about its strength.
                                
 Suffering its biggest one-day drop in over two months, the
benchmark emerging equities index <.MSCIEF> underperformed its
global peer <.MIWD00000PUS> to slip 1.4 percent by 1210 GMT to
its lowest level in nearly two weeks.
                                
 Emerging sovereign debt spreads <11EMJ> widened 3 basis
points to trade at 306 bps over U.S. Treasuries.
                                
 "The mood is a little nervous because of the dollar
strength. Emerging markets benefit from a weaker dollar as no
one wants to hold dollar cash. But when the dollar rises, the
(emerging markets) rally corrects," said Kieran Curtis, an
emerging debt fund manager at Aviva Investors. 
                                
 The dollar was flat against a basket of currencies <.DXY>
after steep gains in the previous session. [ID:nLR141680]
                                
 Sentiment was also weighed by India's move to tighten
credit to its commercial property sector, which came along with
warnings about the threat of asset price bubbles. [nDEL485971]
                                
 Coming after the raising of interest rates in Israel and
Australia, the move heightened investor jitters over the
eventual withdrawal of stimulus measures that have underpinned
the global economic recovery so far.
                                
 Chinese <.SSEC> and Indian <.BSESN> shares tumbled over two
percent, amplifying the selldown seen earlier on U.S. bourses.
                                
 "There's generally a bit of defensiveness going on...Some of
the commodities have come off a bit and that has been a catalyst
(for emerging-market) losses," said Julian Mayo, investment
director at Charlemagne Capital.
                                
 Weaker commodity prices knocked resource-focused South
Africa <.JTOPI> and Russia <.IRTS>, whose shares slipped from
recent 13-month highs to chalk up the day's heaviest losses.
                                
 After setting fresh 2009 highs in successive sessions, the
rouble proved to be one of the day's biggest casualties, falling
over 0.5 percent versus its dollar-euro basket as oil slipped
below $80 a barrel <CLc1>.
                                
 Russia's central bank had been seen intervening on Monday to
slow the rouble's ascent. [ID:nLQ421811]
                                
 
                                
 LIRA RECOVERS, RAND FALLS
                                
 Czech stocks <.PX> fell over one percent to their lowest in
more than two weeks while Romanian shares <.BETI> fell over two
percent in their biggest drop in three weeks.
                                
 Emerging currencies were mostly weaker though the Turkish
lira pared previous day losses against the dollar <TRY=> after
falling over one percent to three week lows on Monday.
                                
 Fitch placed Turkey on its rating watch positive, saying
that its ongoing review of the country has a "strong likelihood
of leading to an upgrade." [ID:nWLA6617]
                                
 South Africa's rand fell against the dollar <ZAR=> after its
finance minister said the government is concerned about its
strength and would have liked to intervene more assertively in
the market. [ID:nWEA6999]
                                
 The rand has gained 25 percent versus the greenback so far
this year despite concern about the government's widening budget
shortfall.
                                
 "The fiscal issue, plus the uncertainties surrounding the
government's stance regarding the currency's strength may be
triggering factors for a correction of the ZAR's overvaluation,"
SocGen said in a client note.
                                
 Meanwhile, Romania's leu remained flat against the euro
<EURRON=>, with investors sidelined by fears of central bank
intervention to shore up the currency.
                                
 On Monday, Romania rejected all bids at a one-year treasury
bill sale due to high premiums demanded by investors.
                                
 The collapse of its government earlier this month has raised
doubts over the country's ability to enforce reforms under its
International Monetary Fund package. [ID:nBUC003519]
                                
 (Additional reporting by Jeremy Gaunt; Editing by Victoria
Main)