* S.Korea, China report surge in new COVID-19 cases
* U.S.-China diplomatic tensions cloud outlook for EM FX - analyst
* Shares in Turkey, South Africa, central Europe gain
* China's April factory prices fall at sharpest rate in 4 years
By Susan Mathew
May 12 (Reuters) - Emerging market stocks fell on Tuesday as signs of a second wave of coronavirus infections sapped risk appetite on fears that it would send many countries back into lockdowns and delay an economic recovery.
While most Asian shares .MIAPJ00000PUS traded in the red tracking an overnight weakness on the Wall Street, emerging market stocks trading during the European day rose in line with developed markets of Western Europe. .EU
MSCI's index of emerging market shares .MSCIEF was down 0.6% after two days of gains.
The Chinese city Wuhan, where the virus originated in December last year, reported a cluster of new cases, while South Korea reported fresh outbreaks in night clubs. The disease was thought to have peaked in both the countries earlier this year.
This comes as many countries had started easing the coronavirus-led lockdowns, in hopes of restarting severely subdued economic activity after economic indicators had started to show the disaster it spelt for the global economy.
Analysts had warned that the impact from a second shut down could be worse than the first.
Riskier assets of emerging markets are typically among the first to be shunned, with many economies within the space already flailing with weak fundamentals. The EM stocks benchmark has already lost about 18% so far this year, which compares to 2011's 20% annual decline, while currency index .MIEM00000CUS has fallen 6%.
"Even the best performers may struggle to hold to their recent gains amid worrisome signals that easing lockdowns increases the risk of a second wave of the coronavirus," according to a note by Jane Foley and Piotr Matys, forex strategists at Rabobank.
Worsening relations between U.S. and China keep them from adopting a solid constructive view on the vast majority of the EM currencies even if risks from a second wave is extremely low, they said. main stock index .SSEC fell 0.1% on Tuesday was 0.2% lower. Highlighting the fragility of demand for industrial goods in the wake of the pandemic, China's factory prices fell at the sharpest rate in four years in April. .SS
India's automakers warned that total automobile sales could fall as much as 45% in the current fiscal year in a worst-case scenario. Shares .NSEI .BSESN fell more than 1.5%, while the rupee managed to gain 0.5% against a steady dollar. lira TRY= gained for the fourth straight day, adding 0.7% after the sovereign wealth fund said on Monday it had increased three state banks' core capital by a total of 21 billion lira ($2.97 billion) to support capital structure and adequacy. GRAPHIC on emerging market FX performance 2020, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance 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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