The International Monetary Fund trimmed its global growth forecasts on Monday as trade tensions and uncertainty loomed, a warning which came shortly after China reported its slowest growth in 28 years for 2018. Weak risk sentiment among investors on Tuesday propped the dollar to hold at a near three-week high.

Gareth Leather, a senior economist with Capital Economics, said a slowdown in emerging markets would be concentrated in export-oriented Asia, where the impact of tepid global growth would be seen most clearly.

MSCI's index of developing world stocks was 0.7 percent lower, retreating from a more than 15-1/2 week high notched on Monday, as weakness in index heavyweights China and South Korea prevailed.

Chinese blue-chip stocks fell 1.3 percent, their steepest decline in more than a month and a half, buffeted by worries about the implications of slowing demand will have for the world's manufacturing powerhouse.

Worries about slower growth in the world's second-largest economy, combined with the greenback's strength, sent the onshore Chinese yuan to a near two-week low as it breached the closely watched 6.8 yuan per dollar mark.

Russia's rouble and local stocks each weakened about 0.2 percent, pressured by a 1.3 percent drop in the price of oil, a key export for the world's largest country.

Emerging Europe was another area of weakness among developing world markets, Capital Economics' Leather said, with Turkey "probably going to experience a deep recession this year."

Turkey's lira softened 0.4 percent to give back all gains made since Thursday.

Commodity giant South Africa's rand shed 0.7 percent while South African equities fell 0.3 percent.

Retailer Shoprite Holdings Ltd led losses on the stocks index, down 2.9 percent, after reporting anaemic growth in the half year to December 2018.

Ratings agency Moody's downgraded Lebanon's sovereign rating to Caa1, adding that the government's debt rescheduling could constitute a default under the rating firm's definition.

In Europe, Romania's leu weakened a touch against the euro and was anchored not far from an all-time low logged against the common currency on Monday. The country's main stocks index dipped 0.4 percent.

Romanian assets have underperformed Central European peers since the government last month announced new levies on the banking and energy sectors.