China markets under pressure as Trump ratchets up tariff talk

• U.S. President Trump threatens 10% tariffs on Chinese imports
• South Africa inflation rises less than expected in December
• Both MSCI EM FX and stocks up 0.2%

Jan 22 (Reuters) - China's stocks and currency came under pressure on Wednesday while most other emerging markets were range bound as U.S. President Donald Trump began to ratchet up tariff rhetoric on Beijing.

Trump said that his administration was discussing a 10% punitive duty on Chinese imports, citing the huge amount of highly addictive fentanyl that he said was coming from China via Mexico and Canada.

The onshore Chinese yuan CNY=CFXS dipped 0.1% against the dollar, after closing at its strongest in over a month in the previous session. Chinese stocks fell almost 1% .CSI300, .SSEC after four days of gains. .SS

"This morning we have seen 10% China tariffs are on the cards and that is throwing a bit of doubt on our more moderate tariff process (view)," said Amundi's head of Emerging Markets Yerlan Syzdykov.

"It is hard to have a base case scenario," he added, given the differing reports on how quickly tariffs could be introduced. "We shouldn't be complacent, sometimes its takes (Trump) time to develop these policies" and "gradual does not mean more moderate."

One-month implied volatility on the offshore yuan CNH1MO=FN, dropped to 4.9, its lowest in a month but it was started to edge up again for other currencies such as Mexico's peso. MEX1MO=FN

During his presidential campaign, Trump had pledged 60% tariffs on Chinese imports to help reduce a trade deficit that now tops $1 trillion annually.

After his swearing-in, he also said he was considering steep tariffs on Mexico and Canada as soon as Feb. 1.

On Wednesday, the peso, MXN= which trades around the clock, was up 0.3% after a volatile few days and a near 20% slump over the last year.

Investors are still on edge as they await more clarity on the implementation of tariffs, which the World Bank and IMF alike had warned could hamper global economic growth.

Away from the tariff talk, South African data showed headline consumer inflation rose less than expected on an annual basis in December. The rand ZAR= was last up 0.2%.

The Russian rouble RUB= hit its highest level since early December, and was last up 1% against the dollar amid market optimism over easing tensions between Russia and the West over the Ukraine war, following Trump's inauguration.

Turkey's lira TRYTOM=D3 was at all-time lows against the dollar ahead of an interest rate decision on Thursday, with markets expecting the central bank to continue its easing cycle and cut its policy rate by 250 basis points to 45%.

Most currencies in emerging Europe were subdued against the euro, while the Hungarian forint EURHUF= slid 0.2%.

The MSCI gauge of emerging market currencies .MIEM00000CUS was up 0.2%, set for a seventh straight session of gains, which would be its longest since September. The stocks index .MSCIEF also rose 0.2%.

Elsewhere, the Malaysian ringgit MYR= was trading at its highest levels in near six weeks after its central bank held interest rates at its first meeting of the year.

Israel's bonds also held recent gains after rating agency S&P Global signalled it could remove its 'negative outlook' on the country's rating in the "coming weeks" if the ceasefire deal in the Gaza war looked to be holding.

HIGHLIGHTS:

** India's budget likely to raise major subsidies by 8% to $47 bln in next fiscal

** Aramco chief expects additional oil demand of 1.3 mln bpd this year

** Azerbaijan central bank holds refinancing rate at 7.25%

For TOP NEWS across emerging markets nTOPEMRG

For CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB

US - China trade https://reut.rs/40Howvm

(Reporting by Purvi Agarwal in Bengaluru; Editing by Kim Coghill)

((Purvi.Agarwal@thomsonreuters.com;))