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EM stocks slump to near 1-month lows

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Rand slides after early S.Africa election results

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Eyes on U.S. inflation data

By Sruthi Shankar

May 30 (Reuters) - Emerging market stocks skidded to

near one-month lows on Thursday as higher Treasury yields

fuelled concerns about restrictive U.S. monetary policy, while

the South African rand and stocks slumped as election results

trickled in.

The benchmark MSCI EM equities index tumbled 1.3%

to its lowest level since May 3, with stock markets in Hong Kong

, Taiwan, South Korea and Poland

falling between 1.3% and 1.7%.

South Africa's benchmark equity index dropped more

than 2%, set for its worst day in more than six weeks, after

early results from the national election showed the African

National Congress (ANC) appeared on course to lose the

parliamentary majority it has held for 30 years.

If the final results were to resemble the early picture, the

ANC would be forced to make a deal with one or more other

parties to govern - a situation that could lead to unprecedented

political volatility in the coming weeks or months.

The rand, a high-yielding currency that is more

susceptible to changes in global mood, fell more than 1% to

18.66 per dollar, its weakest since May 1, while international

bonds lost as much as 1 cent in the dollar.

"The initial outcome points towards a more likely chance of

the worst case scenario for markets, which would basically be

the ANC receiving support in the low 40% range," said James

Wilson, EM sovereign debt strategist at ING.

"Kind of 42%-43% range, which could eventually mean they

have to join a coalition with the likes of the left-leaning

Economic Freedom Fighters (EFF), which would certainly be seen

by the market as something of a negative outcome."

South Africa's central bank is seen holding its benchmark

interest rate at 8.25% later on Thursday, before likely

beginning an easing cycle next quarter as inflation retreats

back to target.

A broader gauge of EM currencies fell 0.2%

to an over two-week low as the dollar gained following a recent

surge in Treasury yields, driven by stronger-than-expected U.S.

data, hawkish comments from Federal Reserve officials and soft

demand at bond auctions.

Investors are awaiting U.S. inflation data on Friday to

gauge the scale of interest rate cuts this year. Traders are

currently pricing just one rate cut from the Fed by the end of

2024.

The Russian rouble, the Turkish lira and the

Polish zloty all eased against the dollar.

HIGHLIGHTS:

** Turkish economic confidence falls slightly to 98.2 in May

** S&P Global will likely raise India's rating within 2

years, Citi says

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