(Bloomberg) -- Emerging markets extended losses, threatening the best annual rally since 2012, as the dollar's strength cut demand for riskier assets in the wake of Donald Trump's U.S. presidential election victory.

The Turkish lira, Russia's ruble and Brazil's real helped lead declines among  developing-market currencies and a gauge of equities retreated for a fourth day amid speculation the U.S. is headed for an era of rising interest rates and protectionist trade policies. Brazil's bonds tumbled the most among peers. Bulgarian debt fell after voters chose former Air Force Chief Rumen Radev, a political novice who wants to limit immigration and reduce sanctions on Russia, as the new president.

Trump's victory spurred a rout in developing markets as investors rushed to haven assets, wiping $1.2 trillion off the value of bonds worldwide, on speculation the president-elect's promises to usher in protectionist trade policies and broaden spending on U.S. infrastructure will fuel inflation. The plunge in currencies was mirrored in the equity and bond markets where investors withdrew $1.72 billion from U.S. exchange-traded funds that buy emerging-market stocks and debt, the largest losses since May.

"The selloff in emerging markets will continue as long as U.S. rates keep climbing," said Guillaume Tresca, a senior emerging-market strategist at Credit Agricole CIB in Paris who recommends buying the Turkish lira against the South African rand. "One could say the current levels are attractive but given the good year so far and with the end of year coming, I don't see reasons for investors to take long emerging-market positions."

The MSCI Emerging Markets Index declined 1.3%, the lowest level since July 8. The gauge pared its 2016 rally to 5.5%, more than half of the gains recorded at the beginning of September. All 11 industrial groups declined.

The MSCI Emerging Markets Currency Index slid 0.3%, extending last week's 2.3% drop, the sharpest four-day loss since 2011. Trump's pledges to boost spending have pushed up bets the Federal Reserve will increase interest rates at its December meeting to 92%, from 76% at the end of the week before the Nov. 8 U.S. election, according to data compiled by Bloomberg.

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