EMERGING MARKETS-FX stable, stocks to end week higher despite Trump sparking volatility

By Purvi Agarwal

Feb 7 (Reuters) - Indexes tracking emerging market currencies and stocks rose on Friday, with both set to recover losses from a week packed with tariff-linked volatility.

MSCI's index tracking global EM currencies .MIEM00000CUS was slightly higher, while the stocks measure .MSCIEF was trading at an over one-month high, boosted by Chinese equities .CSI300, .SSEC that closed over 1% higher. Both indexes were set for weekly gains.

Most EM assets fell sharply on Monday after U.S. President Donald Trump's tariffs materialized, but recovered ground through the week after he paused tariffs on Canada and Mexico for a month. However, trade worries remained firmly on the radar after U.S. tariffs on China came into effect and the country hit back with limited duties on U.S. goods.

Investors were cautious ahead of a crucial U.S. jobs report on the day, where any surprise in the data could put the Federal Reserve in a tough spot on interest rates.

"Even though there's been a de-escalation of tariff threats, the threats are still there and we don't know which ones are going to miss and which ones are going to be hit," said Kathleen Brooks, research director at XTB.

Emerging Europe currencies were subdued against the euro. Russia's rouble RUB= gave back some recent gains, and was last down 0.4% against the dollar, over the counter data showed.

Stock indexes in the region were broadly higher, with stocks in Poland .WIG20 up 0.6%. Hungarian stocks .BUX were up marginally but set for a seventh week of gains, its longest streak since June 2023.

Hungary's Prime Minister Viktor Orban said that the country was preparing to sign a significant economic deal with the U.S. The Hungarian forint EURHUF= and the Polish zloty EURPLN= are set to log their fifth consecutive week of declines.

Turkey's central bank raised its year-end inflation forecast to 24% from 21% and said it is "not on autopilot mode" after two straight rate cuts.

The rand ZAR= was set for its fourth week of declines, having hit its lowest point in two weeks on Monday, after Trump said he would cut funding to the country. Stocks .JTOPI were up 0.5%.

"It will be interesting to see if South Africa changes its stance... I don't think having a de facto economic war with the U.S. would be very good for growth, the rand, or for stocks," Brooks said.

Elsewhere, India's central bank delivered its first interest rate cut in nearly five years and signalled a less restrictive policy approach ahead.

EM-focused wealth manager Ashmore ASHM.L posted a drop in half-yearly pre-tax profit, pressured by lower demand for risk assets.

HIGHLIGHTS:

IMF expects BOJ to raise rates again this year, eye neutral level by end-2027

Oil, gas traders to seek tariff waivers from Beijing for US imports, sources say

Egypt signs $3 billion LNG deals with Shell and TotalEnergies

Panama president to US: Stop 'lies and falsehoods' about canal

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