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EMERGING MARKETS-South African rand leads EMEA losses ahead of economic rescue plan

* South African stocks set for worst day in over 3 weeks

* Russian rouble, stocks fall as sanctions loom

* Chinese yuan falls after weak inflation

Oct 15 (Reuters) - South Africa’s rand extended losses on Thursday ahead of the unveiling of an economic recovery plan, with broader emerging market stocks and currencies retreating in the wake of resurgent COVID-19 cases and fading U.S. stimulus hopes.

The rand fell about 0.7%, among the biggest percentage losers in EMEA after data on Wednesday showed South African retail sales fell in August.

South African stocks were set for their steepest decline in more than three weeks, as doubts persisted over the government’s ability to manage bloated debt levels in the country.

In broader markets, the MSCI’s index of developing world stocks dropped more than 1% and was set for its worst day in three weeks. Demand for risk-linked assets was undercut by some European nations rolling out fresh lockdown measures to curb rising coronavirus cases.

U.S. stocks also provided a weak lead-in after downbeat comments from Treasury Secretary Steven Mnuchin suggested new stimulus would not likely be doled out before the Presidential election on Nov. 3.

“Market volatility is set to continue in the weeks ahead as investors brace themselves for a host of uncertainties: the timing of vaccine availability, the size and timing of additional fiscal stimulus and the election outcome,” Mark Haefele, Chief Investment Officer, UBS Global Wealth Management, wrote in a note.

In Asia, Chinese stocks and the yuan retreated after data showed Chinese inflation remained soft despite a broader economic recovery.

The Russian rouble declined 0.4%, while stocks fell up to 0.9% as the threat of European Union sanctions over the poisoning of Kremlin critic Alexei Navalny weighed. Weak oil prices also undercut export-linked assets in the country.

Elsewhere, Zambia’s bonds slumped as an escalating standoff between the government and the country’s private sector creditors fed fears of an ugly default by one of the world’s largest copper producers.

Creditors have rejected Zambia's requests for a delay in interest payments until April 2021. For GRAPHIC on emerging market FX performance in 2020, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2020, see tmsnrt.rs/2OusNdX

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For RUSSIAN market report, see (Reporting by Ambar Warrick in Bengaluru; Editing by Krishna Chandra Eluri)

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