EMERGING MARKETS-Russia rouble tumbles over 4 percent, debt clobbered

LONDON, April 10 (Reuters) - Russia's rouble tumbled on Tuesday and some Russian bonds plumbed record lows in the wake of U.S. sanctions, but the broader emerging markets complex rallied, encouraged by China's promise to reduce import tariffs.

Russian assets have been pounded following Washington's move to impose major sanctions against Russian businessmen and their companies to punish Moscow for its alleged meddling in the 2016 U.S. election and other "malign activity."

The rouble fell over 4 percent at one point to touch its lowest since December 2016, extending Monday's losses when it also slumped over 4 percent, its biggest daily fall in over three years.

Russia sovereign dollar bonds fell across the curve with the 2043 eurobond issue tumbling almost 4 cents in the dollar according to Tradeweb, while the June 2027 eurobond fell 2.4 cents to 95 cents, a record low.

"It seems as if markets were taken a bit by surprise by the scope and the size of the sanctions," said Per Hammarlund, chief emerging markets strategist at SEB. "People are reassessing their unquestioned positive attitude to Russia."

The average bond yield spread of Russian sovereign bonds over safe haven U.S. Treasuries on the JPMorgan EMBI Global Diversified index jumped 24 basis points (bps) to 235 bps .

Russian five-year credit default swaps rose to 144 bps, their highest since end-September, up 6 bps from Monday's close according to IHS Markit.

Rusal's 2023 dollar bond also hit a record low, tumbling over 17 cents according to Tradeweb.

"It is very serious, it's very rare that you see a country literally force a company from another country towards bankruptcy," said Peter Garnry, head of equity strategy at Saxo Bank in Copenhagen. "When you are shut out of dollar funding markets, a lot of your business will just stop working."

Swiss-based trader Glencore said it would not "at this time" be swapping its shares in the Russian aluminum producer for Global Depository Receipts in EN+ due to U.S. sanctions on both firms.

Russia and the U.S. have also traded barbs over a deadly suspected chemical weapons attack in Syria, with the U.S. promising forceful action and Russia warning of repercussions if Syrian forces are attacked.

The Kazakh tenge fell 1.5 percent to a two-month low, pressured by the drop in the rouble.

But Russian stocks rebounded 1.6 percent after plunging over 8 percent on Monday, against a backdrop of a broad-based rally in emerging equities.

MSCI's benchmark emerging stocks index rose 0.5 percent , boosted by a strong performance in Asia after President Xi Jinping promised to cut import tariffs, calming investor concerns over a simmering U.S.-China trade spat.

Chinese mainland stocks rose 1.9 percent and Shanghai gained 1.7 percent, enjoying its best day in seven weeks. Hong Kong stocks gained 1.7 percent.

But Turkish assets took another beating due to geopolitical tensions related to Syria and after President Tayyip Erdogan reiterated on Monday that interest rates needed to be cut to "save" investors.

The lira touched a record low against the dollar, while stocks tumbled 2.5 percent.

For GRAPHIC on emerging market FX performance 2018, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2018, see http://tmsnrt.rs/2dZbdP5

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Equities Latest Net Chg % Chg % Chg

on year

Morgan Stanley

Emrg Mkt Indx 1169.54 +6.47 +0.56 +0.96 Czech Rep 1127.96 +2.41 +0.21 +4.62 Poland 2258.37 -3.79 -0.17 -8.24 Hungary 38350.51 +44.17 +0.12 -2.61 Romania 8851.42 -9.69 -0.11 +14.16 Greece 812.67 +11.53 +1.44 +1.28 Russia 1076.85 -18.13 -1.66 -6.72 South Africa 50134.25 +742.89 +1.50 -4.57 Turkey 10651.40 -2504.68 -2.21 -4.06 China 3190.65 +52.36 +1.67 -3.52 India 33912.71 +124.17 +0.37 -0.42 Currencies Latest Prev Local Local close currency currency

% change % change

in 2018

Czech Rep 25.33 25.34 +0.03 +0.77

Poland 4.20 4.19 -0.15 -0.55

Hungary 311.58 311.22 -0.12 -0.34

Romania 4.66 4.66 +0.07 +0.41

Serbia 118.06 118.07 +0.01 +0.29

Russia 62.23 60.60 -2.61 -7.34

Kazakhstan 327.11 322.06 -1.54 +1.74

Ukraine 25.98 25.99 +0.06 +8.35

South Africa 12.08 12.08 +0.00 +2.27

Kenya 100.90 100.95 +0.05 +2.18

Israel 3.50 3.52 +0.41 -0.72

Turkey 4.07 4.07 +0.09 -6.88

China 6.29 6.30 +0.17 +3.40

India 64.96 64.95 -0.02 -1.74

Brazil 3.42 3.42 -0.11 -3.22

Mexico 18.28 18.35 +0.40 +7.50

Debt Index Strip Spd Chg %Rtn Index

Sov'gn Debt EMBIG 319 0 .08 7 94.03 1

(Reporting by Claire Milhench; graphic by Ritvik Carvalho Editing by Raissa Kasolowsky)