EMERGING MARKETS-FX, stocks recover after weak US labor data boost rate cut bets

By Purvi Agarwal

Aug 4 (Reuters) - Most emerging market currencies and stocks were higher on Monday, bouncing back from last week's declines amid increased prospects of U.S. interest rate cuts while some caution lingered over trade tariffs.

MSCI's gauge tracking global EM currencies .MIEM00000CUS was up 0.4%, after logging its steepest weekly fall last Friday since early April.

South Africa's rand ZAR= was up 0.3% after a fall of more than 1% last week.

The South African government said on Monday that the country did not pose a trade threat to the U.S. and that it was working on measures to mitigate potential job losses from 30% tariffs announced by the Trump administration.

U.S. President Donald Trump made more tariff announcements last week, confirming rates on some trading partners, while shocking markets with new duties on some, such as Switzerland. These will come into effect on August 7.

Most Asian currencies were also higher against the greenback, with the Malaysian ringgit MYR= in the lead.

Turkey's lira TRYTOM=D3 was largely unchanged. Data showed inflation dipped more than expected to 33.52% in July.

Emerging European currencies were subdued against the euro. The most significant move was a 0.4% drop in the Polish zloty EURPLN=. Russia's rouble was up 0.3% against the dollar, over-the-counter market data showed.

The dollar index =USD was slightly higher in the day, giving back some declines from its over 1% fall on Friday, after a weak jobs report and the subsequent sacking of the Bureau of Labour Statistics chief fanned concerns over the state of the world's biggest economy.

The resignation of Federal Reserve Governor Adriana Kugler on Friday opened up room for Trump to appoint a replacement, amid strained relations with Fed Chair Jerome Powell and repeated calls for lower interest rates.

This revived some bets on a September interest rate cut from the Federal Reserve, with markets pricing in a chance of about 80%, up from 63% before the data, as per CME's FedWatch tool.

"The resurgent US rate cut sentiment is likely to remain in place... Following the disappointing labour market report there is little meaningful data this week that could change the dynamics, and succession talk is adding to the rate cut sentiment," said analysts at Commerzbank.

Regional equities capitalized on the optimism, with MSCI's measure of global EM equities .MSCIEF up 0.7%, after steep declines in the previous week.

Bourses in Romania .BETI and Hungary .BUX were up 0.3% and 0.8% respectively, with the former hovering near record highs. The one in Poland .WIG20 fell 1.3%.

South African stocks .JTPOI gained 0.8%, while ones in Turkey .XU100 jumped 1.1%.

HIGHLIGHTS:

** Korea, US prepare for summit with details of trade deal unresolved

** Indonesia's economic growth likely slowed again in Q2

** India cenbank seen holding rates, but US tariffs raise odds of cut

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For RUSSIAN market report, see RU/RUB