(There will be no EMEA-focused emerging market report on Monday on account of a public holiday. Reuters will resume coverage on Tuesday)
* EM stocks set for third straight weekly decline
* China shares hit by property market slump
* Argentina raises interest rates 550 bps
By Amruta Khandekar and Anisha Sircar
Sept 16 (Reuters) - An index of emerging market stocks fell more than 1% on Friday, led by a rout in China shares, while currencies took a hit from the rising dollar, which drew strength from expectations of a big interest rate hike by the Federal Reserve next week.
MSCI's emerging market (EM) stocks index fell 1.4%, hitting its lowest since June 2020 and on pace for its third straight weekly decline.
China shares, slipped more than 2% as signs of recovery in the economy, which has been ravaged by COVID-19 curbs, were overshadowed by a property market slump.
Broader Asian stocks were also in the red, while several currencies in the region hit multi-year lows including the offshore yuan, which weakened past the critical threshold of 7 per dollar for the first time in more than two years.
"We don't have any sign at this moment that the Chinese economic debacle is coming to an end - the market is very much focused on the risk of an almost synchronised, simultaneous global recession," said Cristian Maggio, head of portfolio and ESG strategy at TD Securities.
Indian shares also fell more than 1%.
Emerging markets have seen pressure from a flight to safer assets in the face of growing concerns about an economic downturn as major central banks raise interest rates to tackle inflation.
Traders are now pricing in a 75% probability of a 75 basis point hike from the U.S. Federal Reserve next week, while bets of an even bigger 100 basis point rate hike stand at 25%. The dollar on Friday extended a rally, headed for a more than 1% rise this week.
Emerging market currencies were down 0.4%. Turkey's lira hit its weakest level since December last year while the South African rand fell 0.5%.
Focus is also on the Russian central bank's policy meeting on Friday, where it is expected to cut the key rate for the fifth time this year. The rouble fell 0.3% against the dollar to 59.97.
"The consensus is for a 50 bps cut, but we expect 75 with the risk of even 100 bps... Growth in Russia will be negative for potentially years, and against that backdrop the central bank...will likely cut rates as low as possible to provide some respite for economic activity," TD Securities' Maggio said.
Argentina's central bank hiked the country's benchmark interest rate 550 basis points to 75% on Thursday.