A set of surveys showed on Tuesday that factory activity shrank in Japan and the eurozone, as well as the United States, which had so far been touted as one of the few remaining bright spots in the global economy. [nL2N26L0OS]
That, combined with uncertainty about whether Washington and Beijing can work out a plausible deal at next week's high-level trade talks, made investors flee riskier emerging market assets.
MSCI's index of developing world stocks <.MSCIEF> fell to a near four-week low, with currencies <.MIEM00000CUS> moving in tandem.
"Trade tensions will remain elevated, and we expect global growth to slow in 2020 to its slowest pace since the GFC (global financial crisis)," said UBS analysts in a note.
"We don't rule out a worsening of the trade situation over the next six to 12 months."
Seoul's Kospi <.KS11> led declines among stocks, down 2%, hit by U.S.-China's trade related uncertainty as well as some panic selling after reports that North Korea fired a ballistic missile off its east coast into the sea. [nL3N26M4EQ]
Despite one of the worst days of violence in the near four months of street protests in Hong Kong on Tuesday, the Hang Seng index <.HIS> closed only marginally lower. [nL3N26M2JC]
Mainland Chinese markets were on a week-long holiday, while Indian markets also remained shut for the day.
Most emerging market currencies made marginal losses against the dollar which took a hit after weak manufacturing reading in the U.S. [FRX/]
South Africa's rand extended losses from the previous session when it fell 1.3% to post its worst day since mid-August after seasonally adjusted Absa Purchasing Managers' Index (PMI) sank to its lowest level in a decade in September. [nL5N26M2KU]
Russia's rouble fell for a seventh-straight session, while Turkey's lira extended losses from an over 1% fall on Tuesday.
In emerging Europe, Warsaw-listed stocks <.WIG20> lost 1% dragged by a nearly 5% fall in Polish fashion retailer LPP's shares, while the Zloty was flat against the euro.
(Editing by William Maclean)
By Agamoni Ghosh