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China, Hong Kong shares rise

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Europe steady, Poland outperforms peers

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Argentina to remain under spotlight

By Niket Nishant

Oct 28 (Reuters) - Emerging market equities slipped on

Tuesday, halting a three-day rally as investors locked in gains

after a run-up driven by optimism over a potential U.S.-China

trade breakthrough.

A deal is expected to defuse tensions between the world's

two largest economies and remove a major drag on global growth

prospects. It could also improve sentiment towards emerging

markets, which rely heavily on foreign capital flows.

Investors still remain quick to capitalize on rallies,

keeping in mind the volatility that has defined trade

negotiations in recent months.

MSCI's emerging market equities index inched 0.5%

lower. Regional currencies were up slightly, but

still confined within a narrow range for the month.

CHINA CLIMBS, EUROPE STEADIES

"We see these trade developments as a positive for at least

some policy certainty moving forward," said Michael Wan, senior

currency analyst at MUFG, though questions around sectoral

tariffs on pharmaceuticals and electronics can still cloud the

outlook.

Mainland China and Hong Kong stocks rose, with the

Shanghai benchmark climbing above 4,000 for the first

time in a decade.

South Korean shares eased 0.8% after hitting record

highs recently, while Taiwan's benchmark was 0.1% lower.

In Europe, Polish equities crept 0.7% higher,

outperforming most regional peers.

Polish central banker Przemyslaw Litwiniuk said he does not

rule out another interest rate cut, perhaps in November, the

state-run PAP news agency reported.

The Polish zloty and the Czech crown

were steady against the euro.

On Monday, Czech President Petr Pavel tapped Andrej Babis,

leader of the populist ANO party that won a parliamentary

election this month, to lead talks on forming a new government,

the next step in the billionaire former prime minister's return

to power.

Oil prices fell for the third straight day, but trade

optimism put Saudi Arabia's benchmark index on track for

its best day in nearly two weeks.

ARGENTINA IN FOCUS

Later in the day, attention will shift to Latin America,

where Argentine assets are in the spotlight after the benchmark

stock index recorded its best day in two years and the

peso logged one of its strongest gains on record.

Other regional markets will also draw attention amid ongoing

trade negotiations and tensions with the United States.

Separately, a poll on Monday showed that the candidate for

Chile's ruling leftist coalition, communist Jeannette Jara,

leads voters' preferences ahead of the first round of the

presidential election but could lose in a runoff against either

of two right-wing opposition candidates.