EMERGING MARKETS-Russia lags EMEA on weak oil prices; Turkey's lira rises

  • Reuters
  • Stock Market News
EMERGING MARKETS-Russia lags EMEA on weak oil prices; Turkey's lira rises
Credit: © Reuters.

* Lira likely supported by state bank intervention

* Russian assets under pressure from weak oil

* CEE assets slightly higher as manufacturing improves (Recasts, adds details on Turkey, updates prices)

By Ambar Warrick

Aug 4 (Reuters) - Russian stocks and currencies were laggards in Europe, the Middle East and Africa (EMEA) on Tuesday due to weak oil prices, while most other regional markets gained on the back of improving U.S. economic data.

The rouble RUB= fell about 1% to the dollar, while stocks .IMOEX .IRTS were weighed down by losses in major energy firms.

Oil prices retreated amid concerns that a fresh wave of COVID-19 infections will see a global demand recovery stalling due to tighter lockdowns. O/R

However, positive U.S. manufacturing data helped lift broader sentiment, with markets also keeping a close watch on talks over fresh stimulus measures in the world's largest economy.

The Turkish lira TRY= rose as much as 0.7% to the dollar, as the interest rate on the currency's overnight swap transactions in the London market surged to 520%. banks have previously cut funding to the London swap market, effectively making it impossible to short the lira in order to curb falls in the currency. banks have been reportedly intervening on behalf of the central bank, trying to slow down the pace of lira depreciation," said Piotr Matys, Emerging Markets FX Strategist at Rabobank.

"Such a move is the indication of the ongoing negative sentiment against the lira."

Data showed Turkey's July manufacturing activity grew at its fastest pace in nine years, while moderating consumer price inflation in the country pointed to more economic stability. However, analysts were sceptical that inflation could remain fettered. European currencies such as the Hungarian forint EURHUF= and the Polish zloty EURPLN= moved in a flat-to-high range against the euro.

Polish manufacturing recovered in July after the easing of coronavirus-led restrictions, a survey showed on Monday, but Hungary posted a more modest improvement and the Czech Republic did not return to growth. market risk assets had marked strong gains in July, amid improving economic data and hopes for a coronavirus vaccine. But they are yet to reach pre-pandemic levels.

In Latin America, Argentina said it had reached a deal with three creditor groups to restructure $65 billion in sovereign debt, which would help it climb out of a damaging default and revive an economy stuck in recession for over two years. GRAPHIC on emerging market FX performance in 2020, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2020, see https://tmsnrt.rs/2OusNdX

For TOP NEWS across emerging markets CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB

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