* S.African economy likely slowed in Q1 - Reuters poll
* 50 bps interest rate hike in Russia expected on Friday -
* Mexican peso pares back gains made on midterm election
* MSCI EM stocks index falls for fifth straight session
June 8 (Reuters) - Frayed nerves ahead of U.S. inflation
data later this week cast a shadow over emerging markets on
Tuesday, with South Africa's rand leading losses ahead of
domestic economic growth data.
Against a stronger dollar, the rand fell 0.6%,
pulling further away from 28-month highs. GDP numbers later in
the morning are expected to show the South African economy
slowed in the first quarter.
But the rand is still by far the best performing EM currency
this year, up more than 8%, helped in part by rising commodity
Turkey's lira the year's worst performing EM
currency so far erased early losses to trade flat, while
Russia's rouble ticked up towards its highest in nearly
three months, despite falling oil prices.
Russia's central bank is seen hiking rates at its meeting on
Friday for the third time in a row, by 25 or even 50 basis
points, as data on Monday showed inflation remained well above
target and showed little signs of slowing.
"The higher-than-expected CPI trend combined with a rebound
in consumer lending growth amid still weak deposit dynamics
should reinforce the Central Bank of Russia's resignation to
exit the loose monetary stance sooner rather than later," said
Dimitry Dolgin, chief Russia economist at ING.
"We believe a jump to the 5.50% level in one 50 basis point
step to be a more likely scenario."
Investors will also keep an eye next week on U.S. President
Joe Biden's visit to Europe where he is expected to meet with
leaders of Turkey and Russia, especially amid deteriorating ties
between Moscow and Western powers.
Mexico's peso slipped 0.1%, paring back only slightly
after gaining nearly 1% on Monday, when markets cheered early
results from midterm elections.
Peru's financial markets are also in focus as left-wing
candidate Pedro Castillo widened his lead over conservative
rival Keiko Fujimori in presidential elections. Castillo said he
would respect the autonomy of the Andean nation's central bank
if he wins the presidency.
The Peruvian sol sank 2.5% overnight and stocks
Broader sentiment was cautious ahead of U.S. inflation data
for May on Thursday, a week before the U.S. Federal Reserve's
June meeting. Any change to the Fed's accommodative stance has
the capacity to reduce flows into riskier assets of emerging
Emerging market stocks extended their declines for
a fifth straight session, and were trading down 0.2%. The index
was pulled lower by a near 1% fall in China's blue-chips index
while heavyweight stock markets in Hong Kong
and South Korea also fell.
For GRAPHIC on emerging market FX performance in 2021, see http://tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance in 2021, see https://tmsnrt.rs/2OusNdX
For TOP NEWS across emerging markets
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see
(Reporting by Susan Mathew in Bengaluru; Editing by Ana
Nicolaci da Costa)