EMERGING MARKETS-Emerging stocks fall 1 pct as Wall Street tech selloff hits Asia


LONDON, July 28 (Reuters) - Emerging equities fell almost 1 percent on Friday amid a sharp selloff in technology shares especially in Asia, but were set to end the week flat.

Investors worldwide were spooked by the previous day's sudden drop in technology and transportation shares on Wall Street that filtered though to Asian markets, pushing down South Korean, Taiwanese, Hong Kong and Indian stocks, which make up more than half of the MSCI emerging equity index.

The Korean electronics sub-index fell more than 4 percent, led by tech giant Samsung Electronics, dragging down the broader index almost 2 percent. Hong Kong shares fell more 0.5 percent off two-year highs.

That took the emerging equities benchmark 0.9 percent lower after it approached three-year highs on Thursday.

Pakistan shares also slid 1.6 percent as a top court ordered Prime Minister Nawaz Sharif be removed from office after a damning corruption investigation.

But Hasnain Malik, global head of equities research at Exotix Capital, called it a positive move.

"We do not view the prime minister and his family as central to the improvements in security nor to the implementation of key initiatives," he said, adding it was hard to describe Sharif's government as business-friendly.

While the dollar remains near 13-month lows, supporting emerging markets, a solid reading on second quarter growth later in the day could boost the greenback, especially after data showing surging durable goods orders.

Currencies weakened in Asia after the equity selloffs, with the Korean won off four-month highs, though the lira and rouble were flat .

Russia is expected to leave interest rates on hold, especially after the U.S. Senate slapped new economic sanctions on the country, pushing Russian shares down 1 percent.

Twelve of 21 analysts polled by Reuters forecast Russian rates to stay at 9 percent.

But ING analysts stuck with a call for a quarter point cut, arguing authorities knew about the U.S. Senate bill in June, and the latest version looked milder.

Russian five-year credit default swaps were steady at 161 basis points (bps), IHS Markit said.

"Either investors are in denial (over the sanctions impact), or assume (President Donald) Trump will block or buy into the durability of the Russian economy angle. Upside currently in oil prices is helping," BlueBay strategist Tim Ash said in a note.

The average yield spread of Russian sovereign bonds over U.S. Treasuries was a point wider at 168 basis points. It blew out to a five-month high of 188 bps in mid-June when new sanctions were first mooted.

German industry groups have expressed concern about the sanctions, which could prevent them working with Russia on pipeline projects. Much of Europe relies on Russian gas to power its economy.

The zloty looked set to end the week in the black, partly recovering from last Friday's sell-off triggered by disputed moves to overhaul Poland's judiciary.

Investors have shrugged off threats of European legal action, including possibly stripping Poland of EU voting rights.

"From a practical standpoint, markets are looking ahead to whether the EU can actually pull the nuclear option of Article 7," said Phoenix Kalen, a strategist at Societe Generale.

"But they are heading straight to the conclusion that this is impossible to achieve without the support of players like Hungary, so ultimately it's all seen as noise."

For GRAPHIC on emerging market FX performance 2017, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2017, see http://tmsnrt.rs/2dZbdP5

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see) Emerging Markets Prices from Reuters

Equities Latest Net Chg % Chg % Chg

on year

Morgan Stanley

Emrg Mkt Indx 1059.43 -9.52 -0.89 +22.87 Czech Rep 1009.51 -5.38 -0.53 +9.54 Poland 2334.01 -16.90 -0.72 +19.82 Hungary 35843.20 +14.50 +0.04 +12.00 Romania 8323.80 +4.23 +0.05 +17.48 Greece 824.96 +6.33 +0.77 +28.17 Russia 1021.53 -9.42 -0.91 -11.35 South Africa 48266.85 -302.57 -0.62 +9.94 Turkey 08051.12 -340.59 -0.31 +38.28 China 3254.13 +4.34 +0.13 +4.85 India 32219.57 -163.73 -0.51 +21.01 Currencies Latest Prev Local Local close currency currency

% change % change

in 2017

Czech Rep 26.05 26.06 +0.02 +3.68

Poland 4.26 4.25 -0.26 +3.42

Hungary 305.39 305.24 -0.05 +1.12

Romania 4.56 4.56 -0.03 -0.61

Serbia 120.19 120.19 +0.00 +2.63

Russia 59.44 59.49 +0.07 +3.06

Kazakhstan 327.13 326.36 -0.24 +1.99

Ukraine 25.90 25.90 +0.00 +4.25

South Africa 13.03 12.99 -0.33 +5.35

Kenya 103.90 103.80 -0.10 -1.47

Israel 3.56 3.55 -0.17 +8.19

Turkey 3.53 3.54 +0.04 -0.21

China 6.74 6.74 -0.01 +2.98

India 64.16 64.11 -0.07 +5.91

Brazil 3.15 3.15 -0.05 +3.15

Mexico 17.71 17.72 +0.04 +16.97

Debt Index Strip Spd Chg %Rtn Index

Sov'gn Debt EMBIG 322 1 .06 7 89.62 1

(Additional reporting by Claire Milhench; editing by Mark Heinrich)