March 12 Reuters Emerging markets currencies and stocks looked to end a volatile week on a sour note on Friday, with a dollar on the rise dousing risk appetite.

MSCIs index of EM stocks fell 0.4 as a pickup in U.S. bond yields pressured risk assets. Gains during Asian hours were erased with a 2.2 drop in Hong Kong shares leading declines.

On the week, however, the EM index was up about 1, recovering after a brief fall into correction territory, as U.S. Treasury yields had pulled back after tepid U.S. inflation data. But it was well short of the rally seen in world stocks , which are up 2.6 so far.

The stabilisation of U.S. Treasury yields… has brought some relief to EM asset markets, even though concerns about the trajectory of UST yields and the recent outflows continue to dominate market sentiment, said Christian Keller at Barclays.

We believe that the market backdrop is still conducive to risktaking in EM, with the rise in oil and commodity prices a supportive factor.

Barclays, citing Emerging Portfolio Fund Research data, also noted that the yields play had spurred sizeable outflows at both EM hard and localcurrency bond funds in the week to March 10. However, these were more than offset by continued inflows into emerging equity funds, led by Asian stocks.

Investors focus next week is likely to be on a U.S. Federal Reserve policy meeting, and the first highlevel talks between Beijing and Washington since U.S. President Joe Biden took office. Frayed…