* MSCI EM stocks, FX indexes set for weekly losses
* India holds rates, unveils currency measures
* Turkey inflation tops forecasts
* Indonesian rupiah hits new low
* South Korean won at weakest since 2009
By Avinash P
June 5 (Reuters) - An index tracking emerging market
stocks slipped on Friday, weighed down by heavyweights South
Korea and Taiwan as the AI rally paused, while a stalemate in
Middle East diplomacy curbed risk sentiment further.
The MSCI index of EM stocks fell about 2% and the
currencies gauge was flat, but both are on track
for weekly losses.
Iranian-backed Hezbollah militia rejected a new ceasefire in
Lebanon and Israel said it would not withdraw troops from the
country, undermining hopes to achieve a broader peace deal in
the Middle East.
"The initial positive impulse came from hopes that the Iran
war could move toward de-escalation. But the same story was
already fragile: Hezbollah rejected the deal and Israel said it
would not withdraw troops from Lebanon, keeping the broader
U.S.-Iran peace path uncertain," said Florian Ielpo, head of
macro at Lombard Odier Investment Managers.
South Korea's AI-heavy benchmark index fell 5.5%,
while the Taiwanese bourse declined 1.3% tracking a
global AI pullback.
Both markets had rallied to record levels powered by an AI
boom that lifted the broader MSCI gauge to new peaks.
Sentiment was cooled by disappointing results from Broadcom ( AVGO )
, whose shares plunged 12% on Thursday and triggered a
semiconductor selloff on the Nasdaq.
In currencies, Indonesia's rupiah opened at a fresh
low but was last flat, and South Korea's won fell 0.4% to
its lowest level since March 2009.
The Reserve Bank of India held its policy rate steady on Friday,
as expected, and unveiled steps to control currency outflows
that have worsened in the wake of the Iran conflict.
The country said it would exempt foreign institutional investors
and the Bank for International Settlements from capital gains
tax on receipts arising from interest or sale of government
securities. The rupee appreciated 0.8%.
However, local stocks reversed earlier
gains to trade lower.
"But it is clear that rupee weakness remains a concern
and, with inflationary pressure also building, we think it is
only a matter of time before the central bank begins a hiking
cycle," said Shilan Shah, deputy chief emerging markets
economist at Capital Economics.
Turkey's inflation was slightly higher than expected in May at
1.71% monthly and up to 32.61% annually, official data showed.
The Turkish benchmark fell 0.9% following the
reading, while the lira slipped 0.3%.
In Africa, South African equities added 0.5% and
the rand was flat.
Most emerging European currencies were little changed
against the euro.
Stocks in Hungary edged 0.9% higher, while Polish
equities fell 0.8% and the Romanian benchmark was
flat.
HIGHLIGHTS:
** South Korea labour minister calls on tech firms to share
excess AI profits with suppliers, staff
** Indian companies willing to deepen presence in Venezuela,
India's oil minister says
** China's central bank resumes cash injection following a
two-day hiatus
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