* Zloty, forint subdued on EU recovery fund tussle
* Hong Kong stocks hit by U.S. sanctions
* Rand jump after upbeat GDP data
By Shashank Nayar and Sruthi Shankar
Dec 8 (Reuters) - Worries over a resurgence in the coronavirus pandemic drove emerging stock markets lower on Tuesday after five-day rally, while east European currencies came under pressure over a European Union budget standoff.
The Hungarian forint EURHUF= traded at its weakest level in a week versus the euro, down 0.2% at 361.69 per euro, while the Polish zloty EURPLN= slipped 0.2%.
A senior diplomat said the European Union needs a signal from Warsaw and Budapest that they will drop their veto of the EU budget and recovery fund on Monday or Tuesday, or the bloc will have to set it up without the two member states. Foreign Minister Peter Szijjarto said on Monday that both the countries are upholding their veto. a change in the decision, the EU will look to bypass Hungary and Poland when it comes to the recovery fund, at least until negotiations next year, said Simon Harvey, FX analyst at Monex Europe.
"It's always a negative for growth outlook and currency markets when fiscal stimulus won't necessarily be coming."
Developing world markets enjoyed a strong rally in November on hopes that more economic support and the rollout of coronavirus vaccines will revive economic growth after the pandemic induced a sharp selloff in March.
China .CSI300 .SSEC and Hong Kong stocks .HSI took a hit as U.S. officials imposed financial sanctions and travel bans on 14 Chinese officials over their alleged role in Beijing's disqualification last month of elected opposition legislators in Hong Kong. investment bank Morgan Stanley (NYSE: MS ) said on Monday it was taking "a few chips off the table" after a thundering rally in emerging markets over the last month. included closing long positions on South Africa's rand ZAR= which has surged 13% since June, tightening stop-losses on Latin American currencies like Brazil's real BRL= and Mexico's MXN= and Colombia's pesos COP= , and chopping back a bunch of bond bets including in Egypt and Ukraine.
The rand jumped 0.5% after data showed South Africa's gross domestic product expanded by a stronger-than-expected 66.1% in third quarter following a 51.7% contraction in the second quarter. 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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