EMERGING MARKETS-FX steady, stocks gain on hopes of near-term Fed rate cuts

By Purvi Agarwal

Aug 5 (Reuters) - Most emerging market currencies were subdued on Tuesday, while stocks gained ground on hopes that the U.S. Federal Reserve will cut interest rates soon.

MSCI's measure of global EM stocks .MSCIEF gained 0.6%, on track for a second day of gains.

Expectations that the U.S. Federal Reserve could ease monetary policy soon have risen after a weak U.S. jobs report revived worries over the health of the world's biggest economy.

The resignation of Fed Governor Adriana Kugler over the weekend also gives President Donald Trump scope to appoint a replacement, prompting speculation this could increase the likelihood of rate cuts.

Markets are now pricing in a 88% chance of a September rate cut, up from a 63% from before the data, according to CME's FedWatch Tool.

Most heavyweight Asian stocks gained, including those in South Korea .KS11 which recorded their best session in more than one month, while Taiwanese .TWII stocks hit their highest since February 21.

Regional bourses in emerging Europe were broadly higher. Romanian stocks .BETI were up 0.7% and Hungary .BUX gained 0.4%. Polish stocks .WIG20 slipped 0.2%.

Stocks in South Africa .JTPOI were 0.2% higher, also boosted by rising gold prices, while in Turkey .XU100 stocks gained 0.4%.

Kathleen Brooks, research director at XTB, said the fact that two interest rate cuts are being priced in now was a great driver for the market, given that tariff concerns had taken a backseat in driving risk sentiment.

But some concerns persisted, with import duties on many U.S. trading partners set to take effect on August 7.

U.S. President Donald Trump on Monday threatened to raise tariffs again on Indian goods, over the country's purchase of Russian oil.

India's rupee INR=IN was down 0.2% and stocks .NSEI, .BSESN dipped 0.3%.

Among the BRICS member countries, Brazil and South Africa also facing some of the highest duties among U.S. trading partners.

"The whole idea of tariffs is to redress this imbalance that Trump sees with the BRICS countries," said Brooks.

"He's going to try and force India to get their oil from the U.S. rather than Russia."

South Africa's rand ZAR= was down 0.5%. Turkey's lira TRYTOM=D3 was little changed.

The dollar index =USD was slightly higher on the day, on track to recover some of its more than 1% decline on Friday. MSCI's gauge of EM currencies .MIEM00000CUS was 0.2% lower.

Currencies in emerging Europe were largely subdued against the euro, barring the Hungarian forint EURHUF= which fell 0.7%.

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