EMERGING MARKETS-Tariff confusion weighs on stocks, FX; rand slips after PPI data

By Lisa Pauline Mattackal

Feb 27 (Reuters) - Indexes tracking emerging market stocks and currencies slipped on Thursday as investors grappled with uncertainty over the implementation of U.S. tariffs, while South Africa's rand lost ground after producer price inflation data.

MSCI's gauge of emerging market currencies .MIEM00000CUS was down 0.2% as the dollar rose. The index of EM equities .MSCIEF lost 0.8%.

Meanwhile, South Africa's rand ZAR= slipped 0.2% against the dollar, set for a fourth session of declines after producer inflation rose to 1.1% in January on an annual basis, slightly higher than the 1% forecast by economists polled by Reuters.

U.S. President Donald Trump on Wednesday floated a 25% "reciprocal" tariff on European cars and other goods. He also raised hopes for another month-long pause on steep new tariffs on imports from Mexico and Canada, saying they could take effect on April 2.

A White House official, however, said Trump's previous March 4 deadline for the 25% tariffs on Mexican and Canadian goods remained in effect "as of this moment.'

Mexico's peso MXN=, however, rose 0.2% in early European trading. Currencies in emerging Europe were broadly lower against the euro, with losses led by the Czech crown's 0.3% fall EURCZK=.

The conflicting comments on tariffs followed Trump's probe into potential new copper tariffs earlier in the week, and highlight the uncertainty investors have faced in parsing rhetoric from action.

"Markets (have) seen enough evidence so far that a lot of (tariffs threats) is potentially negotiation over other matters," said Tim Graf, head of macro strategy for EMEA at State Street Global Markets.

"I'm increasingly of the belief that (tariff threats) are transaction and a pressure point to use to increase other contributions like defence spending in Europe and managing a settlement for Ukraine."

The rouble slipped 0.1% against the dollar RUB=. Russian and U.S. diplomats met in Istanbul for talks on embassy disputes, seen as a step towards ending the war in Ukraine.

Meanwhile, Israel's shekel ILS= gained 0.2% after militant group Hamas said it was ready to begin talks on a second phase of a ceasefire in Gaza.

Focus was also on Turkey, where a delegation of the pro-Kurdish DEM Party visited jailed militant leader Abdullah Ocalan, where he was expected to give them a statement that Ankara hopes will pave the way for his outlawed Kurdistan Workers Party group to disarm.

Such a move would have major consequences for Turkey after four decades of conflict. The lira TRYTOM=D3 was steady, while the BIST 100 index .XU100 gained 0.6%.

The PX Prague SE Index .PX rose 0.2%, hitting a fresh intraday high after the previous session's record close.

Elsewhere, Kenya's government said it could buy back all of its $900 million 2027 Eurobond XS1843435840=TE.

HIGHLIGHTS:

** IMF approves new 40-month $1.4 billion extended fund facility arrangement for El Salvador.

** Trump's steel tariffs imperil China's steel transshipment trade

** Trump axes Chevron's Venezuela oil license, citing lack of electoral reforms

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