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London - Emerging stocks dropped to a two-month low on Tuesday and Turkish and Hungarian debt insurance costs hit six-week highs as most markets played catch up following Friday's weak US jobs data, which dented demand for riskier assets.
As investors returned after Easter holidays, emerging markets sold off on the March slowdown in US job growth to 120 000, well below expectations and the smallest increase since October.
Risk appetite was also subdued on expectations that Chinese first-quarter growth data due at the end of this week will signal the economy grew at its slowest pace in nearly three years, according to a Reuters poll.
"The price action in risky assets has been negative for the past couple of weeks and it continues to appear a little bit negative now," said Luis Costa, emerging markets strategist at Citi.
"The Chinese GDP (gross domestic product) number on Friday is adding to the caution here and then the beginning of the earnings season in the US."
The MSCI emerging equities index dipped 0.27% to a two-month low and the Thomson Reuters emerging Europe index also fell 0.27% to a two-and-a-half week low.
Emerging market currencies were generally softer, with the rand falling 0.5% towards recent 10-week lows,
though emerging sovereign debt spreads narrowed by 2 basis points to 336 bps over US Treasuries.
The cost of insuring Hungary's debt against default rose 16 basis points to six-week highs of 567 bps in the five-year credit default swap market, according to Markit. The country's stock market hit its lowest point in nearly three months.
Concern that Hungary will fail to agree an aid deal with the International Monetary Fund (IMF) has put pressure on Hungarian assets this year.
The IMF said last week there were no formal negotiations with Hungary yet and a local newspaper said the talks were unlikely to begin in April.
Turkish CDS also hit a six-week high, at 243 bps and up 7bps from Monday's close, and Turkish stocks hit a four-week low.
Geopolitics are a mounting potential risk for Turkey after Syrian troops shelled villages, fired across frontiers and were accused of massacres in the hours before a ceasefire deadline many doubt can usher in a UN-brokered settlement to a brutal conflict.
"Turkey has again demonstrated its importance in the region, with PM Erdogan standing as a credible mediator between all sides," said Simon Quijano-Evans, chief EEMEA economist at ING, in a client note.
"This brings risks with it, as seen in yesterday's incidents from across the border in Syria."
Czech stocks fell to six-week lows and the crown hit an eight-day low before trimming losses.
Czech Prime Minister Petr Necas has given his junior coalition partner until Tuesday to agree budget measures to keep cutting the deficit next year or face a government collapse in the worst row in almost two years in power.
As investors returned after Easter holidays, emerging markets sold off on the March slowdown in US job growth to 120 000, well below expectations and the smallest increase since October.
Risk appetite was also subdued on expectations that Chinese first-quarter growth data due at the end of this week will signal the economy grew at its slowest pace in nearly three years, according to a Reuters poll.
"The price action in risky assets has been negative for the past couple of weeks and it continues to appear a little bit negative now," said Luis Costa, emerging markets strategist at Citi.
"The Chinese GDP (gross domestic product) number on Friday is adding to the caution here and then the beginning of the earnings season in the US."
The MSCI emerging equities index dipped 0.27% to a two-month low and the Thomson Reuters emerging Europe index also fell 0.27% to a two-and-a-half week low.
Emerging market currencies were generally softer, with the rand falling 0.5% towards recent 10-week lows,
though emerging sovereign debt spreads narrowed by 2 basis points to 336 bps over US Treasuries.
The cost of insuring Hungary's debt against default rose 16 basis points to six-week highs of 567 bps in the five-year credit default swap market, according to Markit. The country's stock market hit its lowest point in nearly three months.
Concern that Hungary will fail to agree an aid deal with the International Monetary Fund (IMF) has put pressure on Hungarian assets this year.
The IMF said last week there were no formal negotiations with Hungary yet and a local newspaper said the talks were unlikely to begin in April.
Turkish CDS also hit a six-week high, at 243 bps and up 7bps from Monday's close, and Turkish stocks hit a four-week low.
Geopolitics are a mounting potential risk for Turkey after Syrian troops shelled villages, fired across frontiers and were accused of massacres in the hours before a ceasefire deadline many doubt can usher in a UN-brokered settlement to a brutal conflict.
"Turkey has again demonstrated its importance in the region, with PM Erdogan standing as a credible mediator between all sides," said Simon Quijano-Evans, chief EEMEA economist at ING, in a client note.
"This brings risks with it, as seen in yesterday's incidents from across the border in Syria."
Czech stocks fell to six-week lows and the crown hit an eight-day low before trimming losses.
Czech Prime Minister Petr Necas has given his junior coalition partner until Tuesday to agree budget measures to keep cutting the deficit next year or face a government collapse in the worst row in almost two years in power.
