Emerging market stocks headed for a small second quarter gain on Tuesday as roller coaster moves in China, unease about Greece’s future in the euro and political uncertainty from Brazil and Turkey to Ukraine and Russia kept investors on their toes.

Central and eastern European bonds and stocks steadied after the breakdown in Greek talks over the weekend had seen them take a tumble on Monday as part of a global sell-off.

The Chinese equity market roller coaster ride continued in Asia, however, with Shanghai finishing up 3.6 per cent on the day after initially tumbling sharply. It notched its worst monthly loss since mid-2013 but it was its fourth straight quarter in the black and remains the best performing major market of 2015.

Global emerging markets equities measured by MSCI were up 1 per cent on the day to leave them almost 4 per cent up on the year after a 1.5 per cent rise over the second quarter.

JPMorgan’s index of emerging dollar debt has fared less well though after a fractional quarterly fall, while local currency debt lost 0.8 per cent to leave it 4.7 per cent lower on the year.

Away from Greece and China, focus was on talks later between Ukraine, the IMF and a Franklin Templeton-led creditor committee in Washington.

Ukraine is demanding the bond holders accept a 40 per cent write-down but Templeton and the other creditors argue it can be avoided.

“It will be quite difficult for them to get out of this mess,’’ said Viktor Szabo, an EM portfolio manager at Aberdeen Asset Management in London.

“They haven’t had a top level meeting since March. Even if the conflict subsided the rebuilding costs for Donbass region would be around $20 billion. That isn’t in any of the debt estimates so that basically strengthens their argument that their needs to be a principal write-down.’’

On the uncertainty around Greece he was more positive. Aberdeen is currently heavily underweight in central and eastern European assets due to the links the region has to Greece and the euro zone, but he said the recent falls in prices could be an opportunity to reduce its short positions.

Most emerging Asian currencies had risen overnight helped by the dollar’s overnight weakness, but most were set to suffer quarterly losses on expectations of higher US interest rates and concerns over Greece’s endless debt problems.

“Emerging Asian currencies will inevitably weaken. Money is draining away from emerging funds on issues such as US interest rate hikes and risk aversion due to Greece,’’ said Yuna Park, a currency and bond analyst at Dongbu Securities in Seoul.

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