*

Israeli army prepares for departure of Gaza residents

*

China challenges U.S. tariffs at WTO

*

Czech Republic interest rate decision expected

*

MSCI EM FX down 0.2%, stocks up 0.3%

By Purvi Agarwal

Feb 6 (Reuters) - Most emerging market currencies were

lower on Thursday, pressured by a rebound in the dollar index,

while investors awaited more clarity on U.S. President Donald

Trump's policies that have clouded the outlook for EM assets

globally.

MSCI's index tracking global EM currencies

was down 0.2%, while the stocks gauge was up 0.3%, on

track for its third consecutive session of gains.

The Czech Republic awaited a local monetary policy decision,

where the central bank is expected to resume its monetary policy

easing cycle with a 25 basis point cut.

Inflation in the country slowed less than expected to an

annual 2.8% in January, as per a flash estimate. The crown was

0.2% higher.

"We have been bearish since the last inflation print, which

has produced mixed results. For today, the soft inflation number

this morning will bring a higher EUR/CZK..." said analysts at

ING.

"The central bank's new forecast should see some dovish

revisions but the governor's tone will be hawkish in our view."

Investor focus remained on the Middle East, as Israeli local

media reported that the army was ordered to prepare a plan to

allow the "voluntary departure" of residents from Gaza.

The decision follows Trump's controversial plan to takeover

Gaza on Tuesday, that drew international condemnation.

Israel's shekel was flat against the dollar, while

its stocks and dollar bonds in Israel, Egypt and Jordan

were little changed.

Meanwhile, Israel is assessing the feasibility of developing

a market for repurchase transactions involving the country's

government bonds as the conflict weighs on its economy.

Russia's rouble strengthened 1.2% against the dollar,

trading at its highest levels in two weeks, over the counter

data showed. Ukraine's dollar bonds broadly gained about 1 cent

each on hopes of a peace deal between the warring counties.

Traders are shrugging off concerns of a global trade war

risk, and are hoping to expect more of the same when it comes to

eventual talks between the US and China.

China challenged the 10% tariffs U.S. imposed on its imports

on Tuesday, and his cancellation of a duty-free exemption for

low-value packages. Bourses in China closed

over 1% higher.

Elsewhere, a Mexican official said the country and the U.S.

had agreed to economic dialogue.

Hungary's forint and Polish zloty led

declines among emerging Europe currencies, that fellc0.4% each

against the euro. The rand was 0.3% lower.

Regional bourses were broadly higher, with the ones in

Poland and Hungary gaining over 1.5% each.

HIGHLIGHTS:

** Zloty to lead central European currency retreat after

multi-year highs

** Surging dollar spurs jump in corporate FX hedging

** Hungary's retail sales rise 0.1% in annual terms in

December

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