CORRECTED-EMERGING MARKETS-Stocks edge up after selloff, eyes on trade negotiations

By Johann M Cherian

April 8 (Reuters) - Stocks across most major emerging markets rose on Tuesday, rebounding after logging sharp declines in recent sessions, although sentiment was still fragile and investors searched for signs of respite in an ongoing global trade war.

MSCI's index tracking equities in developing markets .MSCIEF edged up 0.3%, bouncing back after logging its biggest one-day drop since the 2008 global financial crisis on Monday.

Indications that countries such as Japan, Vietnam and Israel were looking to negotiate trade deals with the United States further provided impetus for risk taking.

Israel's main stock index .TA125 gained 1%, while indexes in India .NSEI, .BSESN added nearly 2%, and those in central and eastern Europe .MIME00000PUS added 1.8%. Turkish .XU100 stocks gained 0.7%. Vietnamese stocks, however, .VNI continued their drop and were last down 6.4%.

Chinese stocks .CSI300 rose 1.7% as sovereign fund Central Huijin Investment took steps to stabilise the capital market. Hong Kong stocks .HSI climbed more than 1.5%, rebounding from their steepest decline since the 1997 Asian financial crisis. The yuan CNH= was flat.

However, market concerns about a possible global trade war and the consequent economic fallout are still on investors' minds.

A trade war between China and the U.S. appears on the verge of further escalation, while the European Union is also proposing a retaliation.

"The biggest next round of risk comes from Chinese currency devaluation," said Charlie Robertson, head of macro strategy at FIM Partners.

If China sees that retaliatory tariffs are insufficient, it could resort to a currency devaluation to make its exports more competitive in the global market, which will then spill over into a more wider weakness in emerging markets, Robertson added.

Meanwhile, an 8% tumble in Indonesia's stock market .JKSE prompted a 30-minute trading halt, while the rupiah IDR= fell to a record low as markets reopened after an extended holiday break and reacted to the global market turmoil.

A broader currencies gauge .MILA00000CUS dipped 0.2% against the dollar, while currencies of top oil exporters such as Russia RUB=, Nigeria NGN= and Algeria DZD= ticked higher, tracking a rebound in crude prices.

Oil prices have been trading close to four-year lows of about $60/barrel. There are concerns that a slump in demand for the commodity during a global slowdown could hurt economies such as Russia's that are dependent on oil rents.

The bounce back was also reflected on the fixed income front, with Sri Lanka's XS2966242336=TE and Mongolia's hard-currency papers US60937LAE56=TE adding over 3 cents each on the dollar.

Those of Kenya XS1781710626=TE, Jordan JO157795031= and Egypt XS1953057491=TE gained over 1 cent each.

Markets are also watching for developments around a potential end to the Russian-Ukraine conflict. Kyiv's hard-currency bonds XS2895057334=TE, XS2895057177=TE edged up between 0.4-0.6 cents on the dollar.

Goldman Sachs said bond pricing inferred that markets believed there was 70% probability of a Ukraine peace deal, up sharply from before the November election of U.S. President Donald Trump.