EMERGING MARKETS-Stocks extend losses; euro helps up EM FX

Wed Feb 23, 2011 12:17pm GMT

* Stocks down; Gulf markets mostly rise after declines

* Emerging FX gain from euro rise

* Russia favoured; rouble Eurobond pricing later this week

By Sujata Rao

LONDON, Feb 23 (Reuters) - Stock markets across the developing world fell for the third straight day on Wednesday as the turmoil in Libya kept a firm check on risk appetite, but emerging European currencies gained from an uptick in the euro.

With hundreds of people believed to have been killed in Libya and the unrest set to continue, oil prices junped to a new 2-1/2 year peak, fuelling fresh fears for inflation and more policy tightening in emerging economies.

That fear is weighing on stock markets globally, with emerging stocks down half a percent to a one-week low .MSCIEF while global equities were also feeling the pressure via companies exposed to Libya.

Yield spreads on emerging sovereign debt over U.S. Treasuries tightened slightly but were at the highest in nearly six months 11EMJ 11EML.   Continued...

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