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EMERGING MARKETS-Russian rouble firms with all eyes on Belarus; S.African rand extends rally

* Turkey’s lira hits new lows

* Belarus bonds unchanged in early trade

* Lukashenko says ready to share power; EU threatens sanctions

* MSCI EM stocks index trade flat

Aug 18 (Reuters) - Russia’s rouble firmed on Tuesday, after sharp declines in the previous session spurred by political chaos in neighbouring Belarus, while Turkey’s lira reversed a recovery early in the day to hit new lows.

A softer dollar help put a floor under most other emerging market currencies which traded in a tight range. South Africa’s rand rose for the fifth session in six after a coronavirus-induced lockdown in the country was lifted over the weekend.

Emerging stocks, meanwhile, took little inspiration from Wall Street’s tech rally overnight, with the overall index trading flat. Stocks in Turkey and Russia gained while main indexes in South Africa and most of central and eastern Europe lagged.

Russia’s rouble firmed 0.6% against a dollar in the doldrums. Data later on Monday had shown Russia’s industrial output fell in July, but was in line with the expectations.

“In the near term the industrial output should be supported by the relaxation of the OPEC+ restrictions since August, and the continuing fiscal stimulus,” wrote Dmitry Dolgin, chief economist, Russia at ING.

Household income and spending data, and banking statistics due later this week would be the next important piece of evidence to gauge an economic recovery in Russia, he added.

The rouble had lost more than 1% on Monday as protests over disputed presidential elections in Belarus caused increasing geopolitical tensions.

Belarusian leader Alexander Lukashenko on Monday said he would be ready to hold new elections and hand over power after a constitutional referendum, but insisted the offer would not be delivered on while under pressure from protesters.

The European Union is considering imposing sanctions on Belarusian individuals linked to violence and election fraud and will tell Russia not to meddle in the former Soviet republic, after EU leaders discuss the situation on Wednesday, officials said.

Belarus bonds were unchanged in early trade.

Turkey’s lira had firmed slightly on Tuesday but soon gave up gains, losing for the ninth session in ten.

Investors looked ahead to a rate-setting meeting later this week. A Reuters poll showed Turkey’s central bank is seen keeping the rate on hold this week, but is expected to drive funding costs higher with more back-door measures.

Concerns over the bank’s depleted forex reserves, costly interventions in the forex market and Turks’ surging demand for hard currencies have weighed on the beleaguered currency.

For GRAPHIC on emerging market FX performance 2020, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance 2020, see tmsnrt.rs/2OusNdX

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For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see (Reporting by Susan Mathew in Bengaluru; Editing by Shailesh Kuber)

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