EMERGING MARKETS-Stocks decline on U.S. rate hike jitters, China CPI

Emerging market stocks fell for a third consecutive session on Thursday after U.S. data exacerbated concerns of larger interest rate hikes by the Federal Reserve, while a bigger-than-expected drop in China's consumer price inflation also hurt sentiment. MSCI's emerging markets equities index slid 0.7% after data on Wednesday showed U.S. private payrolls increased more than expected in February, keeping outlook for U.S. interest rate hikes hawkish.

Emerging market stocks fell for a third consecutive session on Thursday after U.S. data exacerbated concerns of larger interest rate hikes by the Federal Reserve, while a bigger-than-expected drop in China's consumer price inflation also hurt sentiment.

MSCI's emerging markets equities index slid 0.7% after data on Wednesday showed U.S. private payrolls increased more than expected in February, keeping outlook for U.S. interest rate hikes hawkish. Adding to the fury, China's consumer price index in February was 1.0% higher than a year earlier, rising at the slowest pace in a year and signalling a weak pace of economic recovery. China stocks fell 0.4% on Thursday.

EM assets have been struggling since February despite China easing strict COVID-19 restrictions, as chances of an aggressive monetary policy tightening by the U.S. central bank have firmed with a hot labour market and slow pace of disinflation in the world's biggest economy. "Emerging markets will have more of a rough time coming ahead because in the largest part of the developed market space, we are seeing the outlook that real interest rates will come back to positive territory," said Ulrich Leuchtmann, head of FX research at Commerzbank AG Research.

"This is something which is making the capital imports of especially non-energy exporting-emerging markets more expensive and more difficult." Currencies in the region were flat as the dollar weakened.

The South African rand firmed 0.2% against the dollar, despite S&P Global late on Wednesday downgrading its outlook on the country to "stable" from "positive". Turkey's lira slipped to a record low of 18.9525 against the dollar, weighed down by concerns about the economic impact of the massive earthquakes that hit Turkey last month and ahead of parliamentary elections scheduled for May 14.

In central and eastern Europe, the Hungarian forint slid 0.4% against the euro, while the Polish zloty was flat. The Czech crown was flat against the euro. Data showed the country's foreign trade posted a 9.5 billion crown ($425 million) surplus in January, 2.1 billion crowns higher than a year ago but below a Reuters poll forecast.

Elsewhere in emerging markets, Sri Lanka aims to announce a debt-restructuring strategy in April and step up talks with commercial creditors ahead of an International Monetary Fund review of a bailout package in six months.