* Russian assets sold off after new U.S. sanctions move
* U.S. ties, economic woes pressure Turkish markets
* Emerging equities eke out gains
By Claire Milhench
LONDON, Aug 9 (Reuters) - Russian assets tumbled on Thursday as a new U.S. sanctions move against Moscow unsettled investors, while rocky relations with Washington - along with unease about the economy - also sent Turkey's lira to another record low.
Washington's latest sanctions move - over what Moscow called far-fetched assertions it had deployed a nerve agent in Britain against a former Russian agent and his daughter - will cover national-security controlled goods, hitting Russian exports and even Aeroflot flights to Moscow. rouble RUB= fell around 1 percent to its lowest since August 2016, having already shed 3.3 percent - its biggest daily loss since April - on Wednesday. The Russian currency also hit its lowest since May against the euro EURRUB= .
Moscow's rouble share index .IMOEX fell 0.7 percent, and dollar-denominated equities tumbled .IRTS 2.2 percent to April lows, with Aeroflot AFLT.MM losing 7 percent. dollar bonds fell across the curve, with some issues down around 1.7 cents while five-year credit default swaps rose to 154 bps, the highest since mid-June. Russian markets had already been falling amid heightened concern about another separate round of sanctions, including those owning Russian sovereign debt, being tabled by the U.S. Senate over alleged U.S. election meddling by Moscow.
"The probability that the bill will be passed and the new sovereign debt will be sanctioned is much higher than it was during similar discussions in early 2018," Vladimir Miklashevsky, senior economist at Danske Bank, said in a note.
If this legislation became law and Russia retaliated, Danske Bank estimated the rouble could hit 72 per dollar, as any major selloff of Russian local debt, local credit and stocks would amplify outflows from the currency, he said.
Turkish assets also continued to sell off hard with the lira TRY= down a further 2.8 percent, having fallen almost 7 percent so far this week.
Investors are concerned about a deterioration in relations between Turkey and the United States over Ankara's detention of American pastor Andrew Brunson, with talks in Washington on Wednesday delivering no breakthroughs. was jailed for allegedly supporting a group that Ankara blames for an attempted coup in 2016. He denies the charge.
President Tayyip Erdogan's tightening grip on monetary policy has also unnerved investors, with the central bank unable to tame double-digit inflation.
"I am personally at a bit of a loss why anybody would want to own Turkey here," said Paul McNamara, investment director at GAM London Limited.
"You have the classic combination of excessive domestic borrowing, and an awful lot of money going into construction which leverages the banking system to asset prices and the whole thing underpinned with foreign currency debt."
Turkey's sovereign dollar bonds continued to slide, with some issues down over 1 cent, while Turkey's average bond yield spread over U.S. Treasuries .JPMEGDTURR rose to 462 bps, the highest since April 2009. FROM CHINA
Weathering the twin sell offs, MSCI's benchmark emerging equities index .MSCIEF rose 0.1 percent.
It was boosted by Chinese bourses bouncing amid talk of government support for domestic tech companies as Beijing's trade dispute with the U.S. escalates. blue chips .CSI300 jumped 2.5 percent, the Shanghai Composite .SSEC 1.9 percent and Hong Kong .HSI 0.9 percent. The yuan CNY= firmed 0.2 percent.
Chinese factory price inflation cooled in July amid a slowdown in economic growth, although economists expect tariffs to add to wider price pressures in coming months. Kazakh tenge KZT= fell 1.2 percent to a 30-month low, tracking the rouble lower. GRAPHIC on emerging market FX performance 2018, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2018, see http://tmsnrt.rs/2dZbdP5
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 ) Emerging Markets Prices from Reuters
Net Chg % Chg % Chg
Morgan Stanley (NYSE: MS )
Emrg Mkt Indx .MSCIEF 1080.90
+1.17 +0.11 -6.69
-8.98 -0.83 -0.22
-4.39 -0.19 -6.44
36625.41 -328.75 -0.89 -6.99
-7.93 -0.10 +6.06
-2.02 -0.27 -5.78
1091.91 -21.87 -1.96 -5.42
.JTOPI 51615.86 +37.80 +0.07 -1.75
.XU100 97821.49 +847.64 +0.87 -15.18
2794.71 +50.64 +1.85 -15.50
.BSESN 38028.60 +141.04 +0.37 +11.66
close currency currency
% change % change
65.57 -0.49 -12.50
South Africa ZAR=
5.28 -2.49 -29.96
3.77 -0.01 -12.18
Index Strip Spd Chg %Rtn Index
Sov'gn Debt 11EML EMBIG 366
.02 7 75.94 1
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