LONDON: Emerging equity gains stalled near five-week highs on Thursday as world stocks slipped, while Russian assets slipped off multi-month highs as oil prices eased after hitting fresh 2016 highs.
Trading was capped by a holiday in China, Hong Kong and Taiwan, which are among Asia's biggest markets, while the won slipped 0.3 percent following a surprise interest rate cut, South Korea's first in a year.
MSCI's emerging equity index retreated 0.3 percent after five straight days of gains as Brent oil futures slipped after hitting new 2016 highs above $52 a barrel.
The oil moves took down the rouble which had hit a seven-month high to the dollar and dragged down Russian stocks by more than 1 percent.
Russian 10-year bond yields edged off near two-year lows hit in recent days amid growing expectations that the central bank will cut interest rates on Friday for the first time in nearly a year.
"(The rate cut) is a close call. It seems that the central bank is not really comfortable to ease. They are extra cautious at the moment," Credit Agricole strategist Guillaume Tresca said, although he added a failure to cut would not necessarily derail the rally.
"The global environment for emerging markets is quite positive and oil prices are now above $50 a barrel so I don't think we will have a massive sell-off. Maybe there will be some short term disappointment," he added.
The rand fell nearly 1 percent to the dollar, continuing to feel the effects of data showing a sharp economic contraction in the first quarter, putting South Africa on track for its first recession in seven years.
Bond yields pulled back from one-month lows while dollar bond yield spreads versus Treasuries slipped this week to the lowest since November 2015.
Analysts at MUFG said recent bond gains driven by agencies' opting not to cut South Africa's credit rating may have run their course.
"The rating agencies have stated that economic growth is key to South Africa's rating and we therefore think that downgrade risks towards sub-investment grade remains a likely path. In our opinion, investors should take profit following the recent rally," MUFG added.
In central Europe, the Polish zloty slipped from six-week highs versus the euro hit after the central bank kept interest rates unchanged and signalled a booming job market would likely pull the economy out of deflation.
The meeting was Marek Belka's last as governor before he steps down on Saturday.
The Serbian dinar was flat ahead of a central bank meeting that could see it opt to leave rates unchanged at 4.25 percent despite below-target inflation as talks for a coalition government drag on.
Brazil's real inched to new 11-month highs against the dollar after the central bank on Wednesday resisted calls for a rate cut from 14.25 percent.
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