May 7, 2019 / 8:37 AM / 4 months ago

EMERGING MARKETS-Stocks recover; lira tumbles over Istanbul's re-election

May 7 (Reuters) - Emerging-market shares recovered on Tuesday from their worst day this year amid reports Sino-U.S. trade talks would go ahead in Washington, despite U.S. President Donald Trump’s threat to raise tariffs on Chinese imports as soon as Friday.

MSCI’s index for emerging-market shares advanced, helped by a rebound in mainland China shares, which rose after their worst drop in more than three years on Monday.

Global equities were jolted on Monday as Trump threatened to raise tariffs. U.S. trade officials said the move came because Beijing had backtracked on commitments it made during earlier trade talks. But Chinese officials are still expected at talks in Washington this week.

“We still expect a positive outcome to talks but ... investors need to protect the downside,” wrote UBS analysts in a note.

Most Asian markets were gained, with the Shanghai Composite advancing 0.7 percent and the CSI 300 climbing 1.0 percent. Hong Kong’s Hang Seng was up 0.7 percent.

South Korea’s Kospi was down 0.8 percent, however, after North Korea conducted a round of missile tests on Saturday.

LIRA TUMBLES Among developing-world currencies, Turkey’s lira fell 1.3 percent after the Turkish election board announced Istanbul’s mayoral elections would be re-run. The country’s dollar-denominated government bonds saw their biggest selloff in months and the BIST 100 stock index dropped over 2 percent.

The challenge by President Tayyip Erdogan’s AK Party to the March 31 election result in Istanbul, which showed a narrow victory for the opposition CHP party, has compounded investor worries about politics in Turkey in recent weeks.

South Africa’s rand inched higher as investors bet President Cyril Ramaphosa would win a big enough election majority to push through reforms.

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For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Reporting by Agamoni Ghosh in Bengaluru, additional reporting Marc Jones, editing by Larry King)

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