EMERGING MARKETS-Emerging stocks mixed, FX slip as Mideast tensions rise

Emerging market stocks were mixed ‌on Tuesday ​while currencies slipped broadly, as investors weighed a slew of data and renewed hostilities in the Middle East which pushed up oil prices and bond yields, reinforcing inflation worries and denting risk appetite.

U.S. President Donald Trump threatened further strikes against Iran on Monday ‌after the first exchange of direct attacks in a month, raising tensions in a conflict that began in late February. The latest exchange pushed up oil prices on Tuesday and deepened a global bond market selloff, with investors worried that rising energy costs would add to inflationary pressures and keep borrowing costs elevated, prompting central banks to reassess their policy outlook.

Japan's benchmark 10-year ‌bond yield struck the key 3% barrier for the first time since 1996, while the benchmark U.S. 10-year Treasury yield also pushed to the highest since January of ‌last year. "September will also be a big month for the global bond markets. The Bank of Japan and the ECB are expected to raise interest rates in the coming weeks, while there is a growing chance that the Fed could join them, " Kathleen Brooks, research director at XTB, said.

RUPEE DEFIES BROADER WEAKNESS MSCI's emerging-markets stock index edged up 0.2%, buoyed by modest advances in tech-heavy South Korean and Taiwan stocks, helping offset unease ⁠over the ​geopolitical backdrop.

South Korea's KOSPI ticked 0.2% higher, ⁠aided by a survey that showed the country's factory sector recorded a ninth consecutive month of activity growth in August, underpinned by robust export demand. In China, the benchmark Shanghai Composite index eased 0.2%, while the blue-chip ⁠CSI300 index fell 0.3% even as data showed the country's manufacturing sector expanded at a faster pace in August.

The yuan was flat against the U.S. dollar and hovering near a more than three-year ​peak. The broader emerging market currency index was subdued.

The U.S. dollar strengthened on growing expectations of a September Federal Reserve rate hike after Chair Kevin Warsh said at ⁠the Jackson Hole symposium that policymakers might need to tighten monetary policy further if inflation failed to cool. The Indian rupee, however, defied the broader weakness, appreciating 0.2% to a two-month high powered by flow-related dollar offers from ⁠foreign ​banks and aggressive central bank intervention through state-run lenders.

Turkish equities and the lira were little changed. In South Africa, the rand weakened 0.5% and stocks dropped 1%, tracking lower gold prices as the country is one of the world's largest exporters of the precious metal. In emerging Europe, currencies were mostly lower against the euro with Hungary's forint leading ⁠declines, down 1.1%. Regional stocks dropped 0.5%.

Hungary's seasonally adjusted Purchasing Managers' Index (PMI) edged down to 51.3 in August from 51.4 in July. Polish zloty was down 0.2% and the ⁠equities fell 0.9%.

Poland's manufacturing sector contracted for a ⁠16th straight month in August as output and new orders fell faster and supply-chain pressures intensified amid the Iran war. HIGHLIGHTS:

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