(Updated at 0955 GMT)

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Ukraine c.bank decision on tap

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South Africa's rand drops as precious metal prices slide

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Gaza ceasefire negotiations near closing stages, official

says

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Foreigners sell nearly $1 bln in Indian equities since

budget

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Stocks off 0.6%, FX up 0.2%

By Johann M Cherian

July 25 (Reuters) - Stocks in most developing markets

dropped to more than a one-month low on Thursday, as risk taking

took a dive after a surprise interest rate decision out of

China, while Ukraine bond yields ticked up following a credit

rating downgrade.

MSCI's index tracking equities across emerging markets

dropped 0.6% on track for its ninth day of declines

out of ten, but still hanging onto gains of over 4%

year-to-date.

A currencies gauge edged up 0.2% against a

softer dollar, with markets awaiting economic growth data out of

the U.S. later in the day.

The People's bank of China (PBOC) surprised markets for a

second time this week with an unscheduled lending operation at

steeply lower rates, in a heavier effort to prop the economy,

which spooked investors and sent China stocks

lower by 0.5% each.

China's offshore yuan, however, firmed to levels

seen last in early May, while bond yields across the curve were

flat.

"The PBOC is trying to shore-up sluggish Chinese economic

activity. However, until China deals with its huge debt overhang

(total debt is more than 300% of GDP), the country looks set for

weaker growth in the years ahead," said Elias Haddad, senior

markets strategist at Brown Brothers Harriman.

Indian equities continued their decline for

the fifth straight day, with the indexes on track for their

first weekly losses since late May after equity trading tax

hikes earlier in the week.

The capital gains tax revisions sparked a selloff with data

showing foreign investors offloaded nearly $1 billion worth of

equities in the two days since the budget announcement.

South Africa's rand depreciated 0.8%, tracking a

weakness in precious metal prices, a top export item from the

country.

In central and eastern Europe, Hungary's forint

weakened for the third-straight day by 0.1% to a two-week low on

expectations of more monetary policy easing after an interest

rate cut earlier in the week. Concerns also remain as the

country struggles with the largest debt in the region.

An index tracking stocks in central and eastern Europe

also slid 1.5% to a more than one month low.

Investors monitored ceasefire negotiations between Israel

and Hamas, which U.S. officials said were appearing to be in

their closing stages. The shekel was flat.

Elsewhere, Ukraine's central bank was due to announce an

interest rate decision.

Yields on dollar bonds ticked up 28 basis

points (bps) as ratings agency Fitch downgraded the war-torn

country's credit rating further into default territory, citing a

recently concluded in-principle agreement with a group of

creditors to restructure $20 billion of international bonds.