EMERGING MARKETS-Stocks at two-week low, FX flat as markets absorb US trade jitters

By Pranav Kashyap

May 30 (Reuters) - Emerging market equities skidded to a two-week low on Friday, while currencies held their ground, as investors weathered another twist in the Trump administration's efforts to reset the United States' global trade relations through tariffs.

The MSCI index of emerging market equities .MSCIEF fell 0.8%, while its counterpart for currencies .MIEM00000CUS was little changed.

On Wednesday, a trade court ruled that U.S. President Donald Trump had overstepped his authority in imposing sweeping tariffs on imports from most of the United States' trading partners.

The United States Court of Appeals for the Federal Circuit in Washington temporarily reinstated the duties while it considers an appeal by the Trump administration.

Despite the turbulence, the currency index was poised for its longest monthly winning streak in more than four years, while the stocks index was aiming for its best monthly performance in nearly nine months.

Investors were shifting their gaze towards other assets globally, seeking refuge from the fading allure of U.S. investments amidst tariff uncertainties and the potential of a ballooning fiscal deficit.

The U.S. dollar =USD was set to mark its fifth consecutive month of decline.

"We expect further market volatility ahead as headlines on both trade and fiscal policy emerge in the weeks and months ahead. Near-term gains this year are likely to be more limited," said Mark Haefele, Chief Investment Officer, UBS Global Wealth Management.

In Central and Eastern Europe, Romania's leu EURRON= was on track for its most impressive monthly performance in nearly three years, bolstered by centrist Nicusor Dan's presidential victory, which fuelled investor confidence.

Meanwhile, the zloty EURPLN= faced a 0.6% monthly dip as the nation braced for the second round of Poland's presidential election on Sunday, where a poll showed Warsaw Mayor Rafal Trzaskowski holding a narrow lead over nationalist opponent Karol Nawrocki.

Polish stocks .WIG20 fell 1.1%, to a more than one-week low.

Separately, Poland's flash consumer prices for May came in slightly below expectations.

Turkey's economic narrative unfolded with fresh data indicating a modest 2% expansion in the first quarter, falling short of expectations.

The lira TRY= was set to record its 12th consecutive month of losses.

Stocks in Istanbul .XU100 slid 1% on the day, with bank stocks .XBANK down 1.8%.

The central bank's tightening of policy rates by 350 basis points in March and April aimed to quell the market unrest following Istanbul Mayor Ekrem Imamoglu's arrest.

Economists warned that while inflation was being tempered, economic growth could face headwinds.

Elsewhere, the Czech koruna EURCZK= remained flat. Data revealed an unexpected 0.8% surge in economic output for the first quarter, marking the highest growth since late 2021.

In Kenya, inflation dipped to 3.8% year-on-year in May, down from 4.1% the previous month, nudging the shilling KES= slightly stronger.

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