EMERGING MARKETS-EM assets drop as investors parse Powell commentary; Oracle fuels angst

By Niket Nishant

Dec 11 (Reuters) - Emerging market assets slipped on Thursday as a risk-off mood gripped global markets, with investors unnerved by mixed signals from the Federal Reserve and renewed concerns over technology valuations.

The MSCI index of emerging market stocks .MSCIEF fell 0.6% and the currencies index .MIEM00000CUS dipped 0.1%.

The trajectory of U.S. monetary policy will be critical for emerging markets. A shift to lower rates cuts borrowing costs for companies in the region, and can draw more capital into its higher-yielding currencies.

Markets had expected a hawkish tone in Fed Chair Jerome Powell's comments on Wednesday, but were left debating his message after the U.S. central bank lowered rates by 25 basis points, which too was expected.

Some argued that Powell sounded less restrictive than feared, while others focused on the evident divisions within the central bank as a worrying backdrop for the year ahead.

"It was a cut with some hawkish undertones, but Chair Powell showed more concern about the labour market than about inflation risks," economists at ING wrote in a note.

Ukraine remained in focus, with most of its dollar-denominated bonds inching higher. Diplomatic efforts to end the Russia-Ukraine war have intensified in recent weeks even as the fighting grinds on .

Later in the day, investors will also be watching Latin America, another key segment of the emerging market universe, as geopolitical tensions flare up.

The U.S. had seized a sanctioned oil tanker off Venezuela's coast, a move that could inflame regional strains and send ripples through global oil markets.

Saudi Arabia's stocks benchmark .TASI, whose fortunes are closely tied to oil markets, was 0.1% lower. Central banks in the region lowered their interest rates by 25 bp, following the Fed.

TRADE AND TECH BUBBLE CONCERNS SHAPE MOOD

Globally, markets were staring at another potential bout of weakness due to concerns about a tech bubble, after Oracle's ORCL.N downbeat earnings forecast revived fears about the fundamentals of the artificial intelligence-fuelled rally.

In Indonesia, stocks .JKSE fell 1.44% and were headed for their steepest drop since late October, even after U.S. Trade Representative Jamieson Greer said he was ready to discuss a trade deal with his Indonesian counterpart.

Hopes of a swift accord were clouded earlier this week, when a U.S. official warned that the agreement was in jeopardy because Jakarta had backtracked on several commitments.

The South African rand ZAR=D3 hovered near its strongest levels in nearly three years after the country avoided being dropped from Washington's extended preferential trade programme for Africa, for the time being.

The reprieve came after days of speculation that it could be excluded amid souring relations with the U.S.