* EM dollar bond spread tests widest since November
* Lira steadies after slumping on credibility concerns
* Russia markets shrug off UK/Moscow spy spat
By Marc Jones and Tom Balmforth
LONDON, March 14 (Reuters) - Emerging market stocks fell for the first time in five days on Wednesday, as the threat of a fresh round of U.S. tariffs targeted at China offset a solid start to the year from the developing world’s largest economy.
MSCI’s emerging market index, which covers 24 countries, was down 0.4 percent as the wave of trade uncertainty also pushed dollar-denominated EM government bonds towards their weakest point since November.
With the dollar also pinned at a 1-week low on the tensions, the South African rand, Russian rouble, Turkish lira, Korean Won and Mexican peso all firmed but sentiment was clearly fragile.
Having turfed out his Secretary of State Rex Tillerson on Tuesday, president Donald Trump was seeking to impose new tariffs of up to $60 billion on certain Chinese imports, source said.
“I think there’s nervousness out there about U.S. policy,” said BlueBay asset management’s Tim Ash.
“China’s data has been quite resilient, but if anything it’s simply U.S. policy and what the political changes in the U.S. mean for all the stuff about trade, basically, and U.S.-China relations.”
The Turkish lira rebounded a touch having hit a record low against the euro on Tuesday on worries about a widening current account deficit, conflict in Syria and the possibility of early elections following a crucial law change.
It was last at 4.7774 per euro having been as weak as 4.7761. Against the dollar it was at 3.8621, just off Tuesday’s trough of 3.8715 which was its weakest since mid-December.
“Turkey is a really interesting story,” said Per Hammarlund at SEB bank. “Inflation has surprised on the upside, the central bank is still reluctant to hike, they have had a downgrade and yields are reaching higher.”
“The question is when the central bank will be forced to step in and hike rates.”
Russia’s rouble was slightly firmer too.
Moscow’s markets shrugged as the Kremlin ignored an overnight deadline set by British Prime Minister Theresa May to explain UK assertions that a Soviet-era nerve agent had been used to poison a former Russian spy living in Britain.
Traders are now waiting to see whether Britain and its EU or other NATO allies apply pressure in the form of new sanctions.
The Philippine peso dipped in Asia as its President, Rodrigo Duterte, said it would withdraw from the International Criminal Court (ICC) due to what he called “outrageous” attacks by U.N. officials and violations of due process.
The decision marks an about-face by Duterte, who initially welcomed a preliminary ICC examination into a complaint, filed by a Philippine lawyer, that accuses him and top officials of crimes against humanity, committed during a war on drugs that has killed thousands of people.
In central and eastern Europe, Slovak bond markets were still in focus as Prime Minister Robert Fico faced increased pressure to agree to an early election.
His coalition is crumbling in the face of mass protests prompted by the murder of a young journalist who specialised in exposing corruption.
The rebound in the dollar prompted a small retreat in other regional currencies such as the Polish zloty and Czech crown which tracked the nearby euro lower.
In the western Balkans, Serbia’s dinar hovered near a 2-month low meanwhile ahead of a central bank meeting at 1100 GMT.
A minority of analysts polled by Reuters think there may be a small cut to its 3.5 percent benchmark rate though most expect it to hold steady.
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