(Updated at 0850 GMT)

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Czech rate decision due at 1230 GMT

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Ukraine suspends debt payments

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China PMI shows weakening factory activity

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Czech, Turkish manufacturing activity slows

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Turkey stocks jump

By Lisa Pauline Mattackal

Aug 1 (Reuters) - Emerging market stocks rose on

Thursday after the Federal Reserve signalled it could start

easing policy in September, while currencies across emerging

Europe slipped amid weak manufacturing data for several

economies.

In focus, the Czech crown lost 0.3% against the

euro ahead of an expected 25 basis point (bps) rate

reduction from the country's central bank, slowing the pace of

easing after four 50 bps cuts.

"We expect a hawkish outcome from today's meeting ... CZK

has moved back above 25.400 EUR/CZK under the pressure of

aggressive dovish pricing in recent days," said Frantisek

Taborsky, EMEA forex and fixed income strategist at ING.

"In our view, the CZK has decent potential to rally from

these levels."

MSCI's index of emerging market stocks rose 0.4%, tracking

gains in global equities after Wednesday's signal from Fed

Chairman Jerome Powell that the central bank could start easing

rates in September if U.S. economic data continues on its

current trajectory.

Lower borrowing costs in the U.S. typically weaken the

dollar and lift the appeal of emerging market assets.

However, the dollar regained some ground after

slipping for two straight sessions, with most currencies in

emerging European economies weakening against the greenback.

Weaker manufacturing data also weighed, with the Hungarian

forint losing 0.6% versus the euro, after

manufacturing activity remained in contraction territory.

The Polish zloty dipped 0.2% against the euro,

after S&P Global's Purchasing Managers' Index showed its

manufacturing sector slowed its decline in July, but was still

in contraction.

Ukraine was also in focus after it temporarily suspended

international debt payments as it finalises a restructuring plan

to slash $20 billion of international debt. However, the move is

unlikely to trigger much concern in debt markets.

A bond maturing in 2026 rose about 1.5

cents on the dollar, while a bond that provides additional

payments when the country's economy grows was

little changed.

MSCI's International Emerging Markets Currency Index

edged 0.1% higher after briefly touching its

highest since mid-July.

Russia's rouble strengthened 0.5% against the dollar,

as worries about rising conflict in the Middle East lifted the

price of oil, one of its main exports.

In equities, Turkish stocks jumped 1.7%, led by a

3.6% rise in its bank index.

Manufacturing in Turkey contracting for a fourth straight

month, data showed.

Meanwhile, Nigerian security forces were deployed in major

cities, while the government said it was open to dialogue ahead

of planned protests against a cost of living crisis.

Weaker PMI data also weighed on Chinese shares,

with a slump in its manufacturing activity leading generally

weak readings across Asia's factories in June.

HIGHLIGHTS:

** Hedge fund allocations to China hit five-year low

** GRAPHIC - Election jolts course through markets as risk

returns

** Tensions high in Venezuela after contested election, with

more arrests feared

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