EMERGING MARKETS-FX set for first weekly loss in six as Trump tariffs dominate

By Ragini Mathur and Purvi Agarwal

July 11 (Reuters) - Most emerging market currencies inched lower, set for weekly declines, while stocks were mixed on Friday as investors assessed U.S. President Donald Trump's latest tariff plans and ongoing trade talks before an August 1 deadline.

On Thursday, Trump escalated his trade war with Canada, announcing a 35% tariff on Canadian imports to take effect from August 1.

Investors are also awaiting an expected European Union tariff announcement.

So far markets have avoided major reactions as investors anticipate deals are likely ahead of the revised August 1 deadline and that some of the proposed tariffs could face legal hurdles.

The South African rand ZAR= fell 0.7%, putting it on course for its steepest weekly loss since late March, while its stocks .JTOPI were down 0.5% after Trump threatened an additional 10% on BRICS nations, of which South Africa is a member.

Tariffs on many Asian emerging markets have forced them to step up their trade talks with the United States. Brazil, threatened with 50% tariffs, said it would retaliate.

Regarding Brazil, UBS said that the U.S. administration could run into legal hurdles to justify its threatened tariffs as it had a trade surplus with the country.

Analysts also took the view pragmatism would prevail.

"Emerging markets offer access to unique macro and policy cycles, structural growth opportunities, and diversification benefits - especially amid rising geopolitical fragmentation and shifting supply chains," analysts at UBS' chief investment office, led by Mark Haefele, wrote in a note.

Trade war jitters have driven investors into emerging markets to try to diversify their holdings. The MSCI index tracking global emerging market currencies .MIEM00000CUS has gained about 7% this year.

The index was little changed on the day, but was set to snap its five-week winning streak with marginal declines, as the dollar =USD edged higher, pressuring peers.

Most currencies in emerging Europe weakened against euro.

Romania's leu EURRON= was 0.2% lower after data showed consumer price inflation in the country rose 5.66% on the year in June, exceeding expectations.

The Polish zloty EURPLN= and the Hungarian Forint EURHUF= were down 0.2% and 0.4% respectively.

MSCI's global EM equities gauge .MSCIEF was 0.1% lower on Friday, poised for marginal weekly losses.

Regional stocks were broadly flat, with Romania's .BETI up marginally, while indexes in Poland .WIG20 and Hungary .BUX both slipped 0.2%.

Turkey's lira TRYTOM=D3 was flat, while its stocks .XU100 gained 0.6% to trade at their highest level since March 17.

Meanwhile, Moody's upgraded Oman's rating to 'Baa3' on stronger debt metrics and Fitch Ratings upgraded Bulgaria's on euro adoption approval.

HIGHLIGHTS:

** Asian stocks attract foreign inflows for second month, but tariff outlook clouds

** Brazil has few exit routes from Trump tariff but feels less pain

** Chinese banks stumble on Beijing's consumer lending push

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