EMERGING MARKETS-FX stable, stocks retreat after gains as investors eye trade talks

By Purvi Agarwal

July 22 (Reuters) - Most emerging market currencies were stable on Tuesday and stocks dipped as investors kept an eye on the state of trade negotiations ahead of the White House's August 1 deadline for imposing heavy tariffs.

While Washington has secured only a handful of trade deals to date, several major trading partners are currently in talks with U.S. President Donald Trump's administration in hopes of avoiding the threatened levies.

Markets have remained resilient ahead of the deadline.

South Africa's rand ZAR= was down 0.4%, pulling back after two sessions of gains. The dollar index =USD was slightly higher, pressuring currencies, while Turkey's lira TRYTOM=D3 was flat.

"What you are seeing now is more a function of respite after a strong move higher in markets," said Thys Louw, EM debt portfolio manager at Ninety-One, adding that some investors were reducing their holdings heading into the summer, as liquidity in markets could be low.

"(If the tariffs come into effect), the real impact from an economy perspective is largely focused within developed markets and then pockets of Asia and Europe, rather than EM more broadly," he added.

On the day, most emerging European currencies weakened against the euro. Hungary's forint EURHUF= was down 0.3% ahead of a local monetary policy decision, where the central bank is widely expected to keep rates on hold.

"The market had already priced out all rate cuts before the summer began, leaving only one cut for the end of the year ... the central bank is likely to reaffirm its hawkish stance, so we shouldn't expect many new developments," said analysts at ING.

Russia's rouble RUB= was 0.2% higher against the dollar, over-the-counter market data showed. Russia and Ukraine are set for peace talks in Turkey on Wednesday.

MSCI's index tracking global EM currencies .MIEM000000CUS was down about 0.1%, while stocks across the board took a breather, with MSCI's equities gauge .MSCIEF down 0.5% following three days of gains.

Regional bourses in Poland .WIG20 and Hungary .BUX fell 0.7% and 0.5% respectively. South African stocks .JTOPI were down 0.8%, while Turkish stocks .XU100 were up 0.5%.

Heavyweight Asian stocks were mixed. Stocks in Thailand .SETI fell 1%. The country's cabinet approved Vitai Ratanakorn to be the next governor of the Bank of Thailand. Some analysts view him as a dovish appointment and an advocate for lower interest rates.

HIGHLIGHTS:

** Ukraine's new prime minister seeks new IMF funding, aid from US, Bloomberg reports

** Industrial pruning won't pull China out of deflation as quickly as last time

** Indonesia plans $8 bln refineries contract with US firm amid tariffs deal, sources say

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For CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB