Hopes that the world's top two economies would move towards settling their trade dispute at talks starting on Wednesday took a hit after the US Justice Department levelled criminal charges against Chinese telecom giant Huawei.

"China does not take kindly to these things ... it is a thorn in the side of what are already relatively poor relations between America and China," said Paul Fage, senior emerging markets strategist at TD Securities. Markets were "still waiting for concrete results" on trade, he added.

MSCI's index of developing world stocks dipped 0.1 percent, extending Monday's 0.4 percent drop.

Its index of emerging market currencies was flat, as was China's yuan due to investor concerns on global trade.

Debt investors in emerging markets were focused on Venezuela after the US government ramped up the pressure on socialist President Nicolas Maduro with sweeping sanctions on Venezuelan state-owned oil firm PDVSA.

Turkey's lira was half a percent softer, a day before the central bank's inflation forecast, amid concerns that food prices will spur a quickening in inflation in the first quarter.

Russia's rouble weakened 0.1 percent against the dollar while gains on the local stocks index were capped by a 4 percent drop in aluminium giant Rusal's Moscow-listed shares. That followed their surge in the previous session, which was spurred by a US decision to lift sanctions on firms linked to oligarch Oleg Deripaska.

"The gloomy backdrop is likely to pressure emerging markets in particular, including Russia," wrote analysts at Alfa Bank, adding they expected Russian markets to remain on the back foot amid the developments surrounding Huawei, the US Fed policy decision and increased US pressure on Venezuela.

South Africa's rand was 0.2 percent weaker. Local stocks rose 0.7 percent, aided by a 2.1 percent rise in Absa Group. The lender said its chief executive will retire at the end of February, after the firm completed its separation from Barclays PLC.

Hungary's forint marked time against the euro ahead of a central bank meeting to decide on borrowing costs. Economists polled by Reuters expect the base rate to remain untouched at 0.9 percent, where it has been for about 32 months.

"We expect new policy signals and guidance, along with the possibility that the rate corridor extremities may be shifted up. We do not forecast a hike to the benchmark rate," Commerzbank analysts wrote in a note.