LONDON: Falling oil and commodity prices pushed emerging market stocks off six-week highs and sent most currencies lower on Tuesday, although South Africa's rand hit a near two-month high against the dollar ahead of a budget speech.
MSCI's emerging market benchmark fell 0.3 percent with Asian bourses some of the biggest fallers, China mainland stocks closed almost 1 percent down and stocks from South Africa to Poland traded well in the red.
Investors were spooked by oil prices falling more than half a dollar over concerns that Iran, unshackled from Western sanctions, would raise output and deepen global oversupply. Other growth-sensitive commodities like copper also reversed their recent rally.
"We have lost some of the steam that we saw yesterday when we saw markets rise quite rapidly across the board, and oil prices have pulled back," said William Jackson, senior emerging markets economist at Capital Economics.
China's central bank setting its daily guidance rate for the renminbi weaker added to frayed nerves.
Currencies came under pressure, with Russia's rouble slipping almost 1 percent against the dollar in thin trading due to a domestic holiday.
South Africa provided a rare bright spot, with the rand hitting its highest level in almost two months against the dollar, though it is still down more than 2 percent since the start of the year.
However, analysts expected underlying caution to prevail and said sustained gains would depend on whether Finance Minister Pravin Gordhan could reassure investors in Wednesday's budget speech that prudent fiscal policy remained intact.
"Gordhan has to pull off the tricky challenge of delivering fiscal consolidation without further derailing South Africa's already weak growth," Barclays analysts said in a note.
Turkey's lira, which has slipped 0.7 percent against the dollar since the start of the year, was flat ahead of a central bank meeting which is expected to leave interest rates unchanged. Annual consumer inflation jumped to 9.58 percent in January.
"The lira has done quite well so far this year, but there is a serious inflation problem," said Capital Economic's Jackson.
"It will be important to see if there is any shift in tone to acknowledge the poor inflation outlook."
Turkish assets are also pressured by concerns Ankara is being dragged deeper into the war in Syria, where government forces and Kurdish fighters are pressing on its borders.
In Hungary, the forint snapped a four-day winning streak to weaken 0.1 percent against the euro ahead of a central bank meeting where rates should stay unchanged.
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