*
FX off 0.2% with dollar cautious ahead of US CPI
*
Stocks shed 0.8% after three days of gains
*
China's imports shrink, export growth slow
*
EMs draw net inflows in April; China sees outflows
By Bansari Mayur Kamdar May 9 (Reuters) - Emerging market stocks snapped a three-day winning streak on Tuesday, with China leading the index lower after data showed an unexpected decline in imports and slower export growth adding to concern about recovery in the world's second-biggest economy. Mainland Chinese blue chips and Hong Kong's Hang Seng shed 0.9% and 2.1%, dragging MSCI's emerging markets stocks index down 0.8% by 0804 GMT. China's economy grew faster than expected in the first quarter thanks to robust services consumption but factory output has lagged and the latest trade numbers point to feeble domestic demand despite the lifting of COVID curbs early this year. "At least some market participants may start wondering if recovery in China is not strong enough, what will be the source of global growth over the next few quarters if the U.S. loses more momentum and growth in other developed economies remains relatively sluggish," said Piotr Matys, senior FX analyst at In Touch Capital Markets. Foreign investors funnelled nearly $10 billion into emerging market portfolios in April, with Asia taking the lion's share despite net outflows from China, data from the Institute of International Finance shows. Emerging market currencies slipped 0.2% against a subdued dollar with investors nervous ahead of U.S. inflation data on Wednesday that could provide further clues on monetary tightening in the world's largest economy.
A loans survey on Monday showing U.S. credit conditions were less gloomy than expected supported the dollar modestly as traders pared back expectations on the scale of Federal Reserve rate cuts needed this year to ease banking sector stress. The South African rand and the Israeli shekel eased 0.3% and 0.5%, respectively, against the dollar. The Czech crown edged 0.1% up against the euro, leading gains among central and eastern European peers, after Czech working day adjusted industrial output rose by a higher-than-expected 2.2% year-on-year in March. Elsewhere in emerging markets, as Sri Lanka's creditor nations prepare for their first meeting to co-ordinate restructuring of its debt, the focus is turning to whether China will attend. Saudi oil giant Aramco's first quarter net profit dropped 19% from a year earlier, but still beat analysts' estimates, lifting shares 3.4%. Following feedback from market participants on repatriation challenges in the Egyptian equity market due to low FX liquidity and given the re-emergence of the FX queue, MSCI said it will apply a special treatment for Egypt in the MSCI Equity Indexes.
Russian markets were closed for Victory Day.
(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by
Robert Birsel)
