EMERGING MARKETS-Turkey markets extend losses, weak China data keeps lid on sentiment

Turkey's sovereign dollar bonds also suffered fresh declines, while data showed the country's home sales fell 35.6% year-on-year in April. Broader emerging market stocks rose for the second straight day, up 0.4% by 0822 GMT, while currencies were flat.

Turkey's lira and stocks remained under pressure on Tuesday, a day after the outcome of a closely-watched presidential election disappointed investors, while Chinese equities slipped on fresh data underscoring weakness in the country's economy.

The lira hovered near a two-month low hit on Monday, while the country's main stock index opened lower, a day after logging its steepest one-day percentage fall in over three months. The index pared declines later and was last flat. While incumbent President Tayyip Erdogan did not secure an outright majority in the first round of voting held on Sunday, he led comfortably over his main rival, dashing investor hopes for an opposition win and a return to orthodox monetary policy.

"Markets are now reacting to the fact that we're probably going to get a return to the previous administration and a continuity of the policies that have made Turkey almost un-investable as far as western fund managers are concerned," said Jon Harrison, managing director of EM macro strategy at TS Lombard. Turkey's sovereign dollar bonds also suffered fresh declines, while data showed the country's home sales fell 35.6% year-on-year in April.

Broader emerging market stocks rose for the second straight day, up 0.4% by 0822 GMT, while currencies were flat. However, keeping a lid on gains, stocks in China fell 0.5%, as data showing weak industrial output and retail sales growth added to fears of a rocky post-COVID recovery for the world's second largest economy.

"Because this is a very unbalanced recovery, we don't think that there's going to be much in the way of consumer demand for manufactured products. So the countries that export to China are not going to get that benefit from the China recovery," said Harrison. South Africa's rand slipped 0.3% against the dollar ahead of first-quarter unemployment figures that will provide a steer on the health of the local economy that has been crippled by the worst power cuts on record.

Sentiment has been further damaged by U.S. allegations that the country had provided arms to Russia, though South African officials have denied such claims. The South African National Defence Force (SANDF) said on Monday that its army chief, Lawrence Mbatha, was in Moscow for a bilateral meeting.

Among central and eastern European currencies, the Hungarian forint and the Romanian leu were under pressure after weak economic data, down 0.1% each against the euro. Data showed Hungary's economy stayed in technical recession in the first quarter, with GDP dropping 0.2% from the previous quarter, while Romania's first quarter economic growth fell below market forecasts.

Elsewhere, Venezuela's political opposition - recognized by the U.S. as the country's legitimate government - was asked by a key creditor group on Monday to back the suspension of a statute of limitations on repayments for defaulted government bonds. For GRAPHIC on emerging market FX performance in 2023, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2023, see https://tmsnrt.rs/2OusNdX

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