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Russia central bank decision on deck

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MSCI EM FX, stocks index set for weekly declines

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China bond yields fall

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EM FX up 0.1%, stocks down 0.8%

By Lisa Pauline Mattackal

Dec 20 (Reuters) - Most emerging market stocks slipped

and currencies steadied on Friday ahead of a key U.S. inflation

print, with indexes tracking both set for their worst week in

more than a month after a hawkish turn from the Federal Reserve

unnerved investors.

The U.S. Federal Reserve's preferred measure of inflation,

the Personal Consumption Expenditure index, is due later in the

day.

Traders will be looking for signals on how much the Fed

could ease policy next year after it projected a more cautious

stance in 2025 earlier this week, which saw emerging market

stocks and currencies tumble on the prospect of

higher-for-longer interest rates in the world's largest economy.

The dollar fell 1% against Russia's rouble, ahead of

an interest rate decision where the Russian central bank is

expected to hike its main rate by 200 basis points to 23%.

Russian President Vladimir Putin on Thursday flagged signs

that the economy was overheating and urged the central bank to

make a "balanced decision".

MSCI's emerging markets currency index was

up 0.1% at 0915 GMT after falling 0.4% on Thursday.

An index of EM stocks fell 0.8% on the day,

weighed down by losses in heavyweight Asian tech stocks.

MSCI's EM currency index dropped 0.5% this week, trading

just above a four-month low and on track for its worst week

since the week of Nov. 11. Several EM central banks stepped in

to prop up their currencies by selling dollars on Thursday.

An index of EM stocks was also on course for its

worst week in over one month with weekly declines of more than

3%.

"Stubborn core inflation, the very robust economy and Donald

Trump, whose policies are likely to drive up inflation, will

leave the Fed with no leeway for further easing of monetary

policy," Berenberg analysts said.

"We are comfortable with an underweight position in emerging

market equities."

The change in the Fed's outlook puts emerging-market assets

under more pressure at the year's end, amid a rising U.S. dollar

and Treasury yields, while the threat of tariffs from U.S.

President-elect Trump's incoming administration looms.

Hungary's forint was on track to snap three

sessions of losses against the euro. The Polish zloty

was little changed after retail sales rose 3.1% in November,

more than forecast.

Turkey's lira lost more ground against the

dollar, and was down 0.2%.

Polish stocks fell 1.4%. South Africa's benchmark

index lost 0.7%, trading at its lowest intraday level

in over one month.

In Asia, yields on Chinese bonds fell across the curve after

China left its benchmark lending rates unchanged, as expected.

HIGHLIGHTS:

** Hungary central bank raises implied forint interest rate

by 50 bps for year-end FX swap tenders

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For RUSSIAN market report, see