LONDON, July 20 (Reuters) - Emerging markets' eight-day run of stock gains stalled on Thursday as the dollar paused after hitting 10-month lows.
South Africa's rand was pressured by the possibility of an interest rate cut later in the day.
Investors are also awaiting post-meeting comments from European Central Bank President Mario Draghi on the bank's plans to start scaling back stimulus, a decision that will impact emerging assets, especially in eastern and southern Europe.
Japanese policymakers showed no inclination to dial back their easy-money policies, sending Asian shares to multi-year highs. But the dollar firmed against a basket of currencies, weighing on emerging assets.
MSCI's emerging equity benchmark was flat after eight days of strong gains that took it towards 27-month highs.
On currency markets, the rand slipped 0.4 percent against the dollar before a central bank meeting that some reckon could deliver a rate cut that would come after three years of policy tightening.
Data this week showed inflation at a 19-month low and well below the upper target of 6 percent.
Simon Quijano-Evans, investment strategist at asset manager Legal & General, noted recent rand strength despite a lacklustre economy and low central bank reserves.
"From that point of view, the (central bank) should be relatively relaxed about any implications for the currency. Also given the central bank is the only institution that can really do anything to support the economy at the moment, then there must be substantial talk backstage about the possibility of cutting the rates," he said.
Elsewhere, the lira slipped 0.2 percent amid a war of words between Turkey and Germany over the latter's criticism of activists' arrests. Data also showed Turkish consumer confidence languishing at 71.3 points in July, well below the 100-mark that would denote optimism.
In Eastern Europe, the region most vulnerable to ECB policy tightening, currencies slipped versus the euro and bond yields rose off multi-month lows.
The Polish zloty fell 0.2 percent against the euro and 0.3 percent versus the dollar , pressured also by the possibility of European Union action against Warsaw over a controversial judicial shake-up.
Polish five-year credit default swaps hovered near six-week highs around 63 basis points, according to IHS Markit data.
But Commerzbank analysts named robust economic data and low inflation as supporting Polish markets.
"This (EU) development can potentially raise the political risk premium on Poland and Hungary, and EU funds could potentially be frozen – but, until such time that concrete penalties are applied, the zloty market takes a rather relaxed view," they wrote.
L&G's Quijano-Evans said it was questionable that the bloc would be able to to initiate procedures against Poland, given Warsaw would be supported by fellow EU state Hungary.
"If...Article 7 were to be initiated then that would definitely be a negative for the zloty, but at the moment that looks like a bazooka scenario," he said, referring to the measure that would suspend Poland's EU voting rights.
The Czech crown slipped off four-year highs hit against the euro on Wednesday as expectations grew that a rate rise could come as early as August.
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see) Emerging Markets Prices from Reuters Equities Latest Net Chg % Chg % Chg
Morgan Stanley Emrg Mkt Indx 1059.27 -0.85 -0.08 +22.85
Czech Rep 1008.33 +0.41 +0.04 +9.41
Poland 2370.13 -4.18 -0.18 +21.67
Hungary 35729.69 -59.59 -0.17 +11.64
Romania 8307.15 +38.38 +0.46 +17.25
Greece 854.41 +0.87 +0.10 +32.75
Russia 1041.65 -1.48 -0.14 -9.60
South Africa 47968.33 +219.65 +0.46 +9.26
Turkey 07396.49 -21.03 -0.02 +37.44
China 3245.33 +14.36 +0.44 +4.57
India 31922.91 -32.44 -0.10 +19.89
Currencies Latest Prev Local Local
close currency currency
% change % change
Czech Rep 26.04 26.06 +0.07 +3.71
Poland 4.21 4.20 -0.13 +4.60
Hungary 306.01 305.79 -0.07 +0.92
Romania 4.56 4.57 +0.06 -0.61
Serbia 120.50 120.57 +0.06 +2.37
Russia 59.17 58.98 -0.32 +3.54
Kazakhstan 325.68 326.31 +0.19 +2.45
Ukraine 25.92 25.94 +0.08 +4.19
South Africa 12.97 12.92 -0.41 +5.85
Kenya 103.73 103.90 +0.16 -1.31
Israel 3.57 3.57 -0.13 +7.83
Turkey 3.53 3.52 -0.32 -0.16
China 6.77 6.75 -0.27 +2.57
India 64.44 64.25 -0.29 +5.44
Brazil 3.15 3.15 -0.02 +3.31
Mexico 17.64 17.54 -0.59 +17.40
Debt Index Strip Spd Chg %Rtn Index
Sov'gn Debt EMBIG 324 0 .02 7 90.25 1
All data taken from Reuters at 08:38 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT.
Reporting by Sujata Rao; additional reporting by Claire Milhench