EMERGING MARKETS-Turkish assets take fresh dive; firmer dollar hits emerging assets

By Sujata Rao

LONDON, July 20 (Reuters) - Turkey's deepening political turmoil pushed the lira to 10-month lows and drove up bond yields and debt insurance costs on Wednesday, while other emerging assets also suffered at the hands of a firmer dollar.

Turkey has been hit hard by the aftermath of last Friday's botched coup, and emerging markets have given up some recent gains as robust U.S (Other OTC: UBGXF - news) . data has revived some rate rise expectations for 2016 and sent the dollar index to four-month highs.

Emerging stocks inched further off 7-1/2 month highs and currencies were mostly weaker against the dollar.

The lira tumbled to lows beyond 3.06 per dollar after reports that President Tayyip Erdogan was widening a crackdown on opponents after the failed coup, with thousands of soldiers, judges, civil servants and academics fired, suspended or detained.

It later recovered to around 3.02 but investors remain nervous before a meeting of the National Security Council which could announce further measures.

"We continue to expect the lira to struggle, see downside risk to the currency and look for dollar/lira to stay above 3.00 today," ING analysts told clients.

Political turmoil could precipitate ratings downgrades, ING said, adding: "From a flow perspective, this should keep foreign investors cautious about lira assets and limit inflows into Turkish government bonds."

Turkish 10-year local bonds also fell, with yields some 20 basis points higher, while yield premia carried by Turkish sovereign dollar bonds over Treasuries were around 330 basis points, having widened 36 bps on Tuesday.

Credit default swaps rose 10 bps, Markit (NasdaqGS: MRKT - news) said.

JPMorgan (LSE: JPIU.L - news) estimated around $10 billion could flee Turkish government and corporate bonds should the sovereign credit rating be cut to junk.

The situation has also forced the postponement of two bank dollar bonds from Yapi Credit and Sekerbank.

The rand rose 0.3 percent to the dollar, recovering some of Tuesday's 1 percent fall. Data showed inflation rose to 6.3 percent in June, cementing expectations the central bank would keep interest rates steady on Thursday and possibly raise them in November.

Brazil is expected to keep interest rates steady at 14.25 percent later in the day.

For GRAPHIC on emerging market FX performance 2016, see http://link.reuters.com/jus35t

For GRAPHIC on MSCI (NYSE: MSCI - news) emerging index performance 2016, see http://link.reuters.com/weh36s

For GRAPHIC on MSCI emerging Europe performance 2016, see http://link.reuters.com/jun28s

For GRAPHIC on MSCI frontier index performance 2016, see http://link.reuters.com/zyh97s

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

on year

Morgan Stanley (Xetra: 885836 - news) Emrg Mkt Indx 869.64 +1.52 +0.18 +9.51

Czech Rep 880.49 +4.28 +0.49 -7.93

Poland 1793.92 +1.45 +0.08 -3.51

Hungary 27388.21 -21.93 -0.08 +14.50

Romania 6657.21 +12.15 +0.18 -4.96

Greece 571.31 +7.56 +1.34 -9.51

Russia 951.42 -1.38 -0.14 +25.68

South Africa 46268.10 +53.82 +0.12 +1.03

Turkey 76070.69 -107.12 -0.14 +6.06

China 3028.34 -8.26 -0.27 -14.43

India 27900.02 +112.40 +0.40 +6.82

Currencies Latest Prev Local Local

close currency currency

% change % change

in 2016

Czech Rep 27.00 27.01 +0.05 +0.01

Poland 4.38 4.38 +0.13 -2.69

Hungary 314.38 315.01 +0.20 +0.08

Romania 4.47 4.47 -0.07 +1.08

Serbia 123.23 123.18 -0.04 -1.43

Russia 63.30 63.50 +0.31 +15.25

Kazakhstan 341.07 338.76 -0.68 -0.17

Ukraine 24.79 24.81 +0.08 -3.38

South Africa 14.27 14.32 +0.35 +8.35

Kenya 101.45 101.45 +0.00 +0.74

Israel 3.86 3.86 -0.17 +0.66

Turkey 3.03 3.04 +0.43 -3.71

China 6.68 6.69 +0.23 -2.78

India 67.19 67.19 +0.00 -1.48

Brazil 3.25 3.25 -0.07 +21.79

Mexico 18.49 18.50 +0.03 -7.14

Debt Index Strip Spd Chg %Rtn Index

Sov'gn Debt EMBIG 377 -2 .04 7 56.76 1

All data taken from Reuters at #N/A The record could not be found GMT.

Currency percent change calculated from the daily U.S.

close at 2130 GMT.

(Editing by Mark Trevelyan)