* China factory activity contracts in December
* S.Africa’s Top-40 stocks index set for worst day in 4 months
* Turkey manufacturing PMI falls again in December; lira drops
* Lacklustre German manufacturing data weighs
By Aaron Saldanha
Jan 2 (Reuters) - Most bourses in emerging markets fell on Wednesday to start 2019 on the back-foot, as lacklustre factory data out of China fed worries about slowing global economic growth, while developing world currencies marked time against a softer dollar.
Factory activity in the world’s second biggest economy shrank for the first time in over two years in December, testifying to the toll the U.S.-China trade war has exacted.
A soft dollar provided some leeway for emerging market currencies with cautious sentiment prevailing amid the partial U.S. government shutdown and a slower pace of Federal Reserve rate hikes.
“It looks like the weak Chinese PMI data is reinforcing concerns of a slowing Chinese economy and that is weighing heavily on stock markets,” said Jason Tuvey, a senior EM economist with Capital Economics in London.
MSCI’s index of developing world stocks dropped 1.6 percent, set to clock its biggest one-day percentage loss in more than three weeks.
China’s blue-chip CSI300 index fell 1.4 percent while bourses in export-oriented South Korea and Taiwan each recorded losses of more than 1.5 percent.
“We feel that the slowdown in China will feed through, that weaker growth in China will lead to weaker growth in Asia and other countries that are dependent on trade with China ... we are likely to get a slowdown across the EM world,” said Capital Economics’ Tuvey
Russia’s rouble edged higher, weathering a 1.5 percent slide in the price of key export oil. Its oil production rose to a post-Soviet record high of 11.16 million barrels per day in 2018, data showed on Wednesday.
Resources major South Africa saw its rand soften 0.4 percent, while the Johannesburg Stock Exchange’s Top-40 index tumbled 3.5 percent, on track for its worst session in about four and a half months.
Turkey’s lira, the focal point of a crisis in 2018, was 1.1 percent weaker on Wednesday. A business survey showed manufacturing activity contracted for the ninth straight month in December, as output and new orders continued to decline.
Data showing German manufacturing growth slowed in December hurt sentiment towards central and eastern Europe - regions generally dependent on Germany as an export destination.
The Czech crown, Polish zloty and Hungary’s forint all softened against the euro, falling in a range between 0.09 percent and 0.3 percent.
The forint weakened to slip away from 200-day moving average of about 321 against the euro, despite data showing the seasonally-adjusted Purchasing Managers’ Index in Hungary rose in December from November. Hungarian stocks dipped 0.4 percent.
Polish stocks were trading down 1.3 percent lower on broad-based losses, on pace for their lowest closing level in over three weeks.
For TOP NEWS across emerging markets
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see (Reporting by Aaron Saldanha in Bengaluru; Editing by Richard Balmforth)