EMERGING MARKETS-Emerging market FX set to end week near record highs

By Nikhil Sharma

June 6 (Reuters) - Emerging market assets were set to close the week higher on Friday, supported by a weaker dollar, as investors navigated U.S. President Donald Trump's trade manoeuvres that have dictated market sentiment throughout the week.

The Russian rouble RUB= fell 2.6% against the U.S. dollar ahead of the central bank's decision on its key interest rate, with expectations in a Reuters poll pointing to a decision to hold.

Increasingly, however, analysts have said the sharp slowdown of the economy and a decelerating inflation rate could lead the central bank to surprise the market with a cut at the upcoming meeting, triggering a weakening of the rouble.

The MSCI index of emerging market currencies .MIEM00000CUS held steady near an all-time high hit in the previous session. The index, up 0.5% so far this week, is on track for its seventh weekly advance in eight.

A parallel index of emerging market equities .MSCIEF dipped 0.1%, but hovered near an eight-month peak and was up more than 2.1% for the week.

The dollar index =USD edged higher ahead of Friday's jobs data that could dictate the next move for the currency.

Erratic U.S. trade policy has weighed on the dollar, supporting capital inflows into emerging markets as global investors look at international arenas to diversify their portfolio in the hope of better returns.

"There's a good chance that it's just the start of a bigger trend. For the first time in many years, there's a little bit of interest in emerging markets and that will lead to some flows, more likely to come from the U.S.," said Rob Brewis, fund manager at Aubrey Capital Management.

Markets assessed Thursday's much-anticipated hour-long telephone call between Trump and Chinese leader Xi Jinping after weeks of trade tensions. The dialogue gave no clear indication of a breakthrough, although the leaders left open the possibility of further talks.

In Poland, the main stock index .WIG20 and the local currency the zloty EURPLN= were on pace for weekly losses, down 3.9% and 1.1% respectively, on fiscal concerns following eurosceptic Karol Nawrocki's presidential win.

The central bank on Thursday said it will not announce the interest rate path because of the economic uncertainty. The bank had left its main interest rate unchanged at 5.25% earlier this week.

On the day, Poland's banking index WIG banki .BNKI fell 3.5% after its parliament speaker proposed the introduction of a windfall tax on lenders' excess profits to the coalition agreement.

Meanwhile, Hungary's forint EURHUF= fell 0.6% after data showed industrial output fell more than expected in April. The currency was largely unchanged for the week.

Investors looked ahead to Fitch's review of Hungary's credit rating. The Budapest stocks .BUX ticked down 0.1%, taking its weekly gains to 0.8%.

In the Czech Republic, the main stock index .PX held steady after first-quarter output growth exceeded 2% year-on-year. For the week, the index was up 0.4%.

The Romanian leu EURRON= on Friday was up 0.1%, after the economy expanded by 0.3% year-on-year in the first quarter, surpassing an initial flash estimate. Over the week, it has gained 0.33%.

Elsewhere, Indian shares advanced about 1% after the Reserve Bank of India cut its key repo rate by a larger-than-expected 50 basis points and lowered the reserve ratio for banks as the central bank shifts its focus to boosting growth.

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