* Emerging currencies set for worst day since mid-May
* China talks policy stimulus amid trade uncertainties
* Turkish lira declines after Monday's surge
July 2 (Reuters) - Most emerging market currencies and stocks weakened on Tuesday, as worries about global growth and trade uncertainties came to the fore following a short-lived relief after the United States and China agreed to return to the negotiating table.
The MSCI index of developing world currencies fell 0.45%, on track for its biggest daily drop since mid-May, with onshore yuan giving up all gains made on Monday after U.S. President Donald Trump held off new tariffs on Chinese goods.
The tone changed on Tuesday after Trump said any deal would need to be somewhat tilted in favor of the United States, arguing that China has long had a trade advantage.
"When you look at the bigger picture, the trade story hasn't changed just yet. There is a risk that tensions will come up again," said Trieu Pham, EM credit research strategist at ING.
"The increasing importance of China in the global picture, together with a slowing growth environment, it adds constraints to being really bullish."
Dampening the upbeat sentiment from Monday was a slew of discouraging manufacturing surveys and Trump's threat of additional tariffs on European goods.
Amid the trade uncertainties and a slowing domestic economy, Chinese Premier Li Keqiang said the country would end ownership limits for foreign investors in its financial sector in 2020, a year earlier than scheduled, and push forward opening its manufacturing sector including the auto industry.
Shanghai-listed stocks ended flat.
Other stock markets were mixed with Hong Kong stocks gaining while shares listed in Moscow, Johannesburg and Istanbul fell.
TURKISH LIRA DIPS
The tepid moves in the latest month follow a strong showing in June for emerging markets on hopes of a dovish turn from major central banks around the world.
Interest rate moves by central banks across a group of 37 developing economies showed a net five rate cuts last month - the largest number since September 2017. In May, developing market central banks recorded a net two rate cuts.
Among other currencies, the Turkish lira fell about 0.5% following a strong rally on Monday after upbeat comments from Trump's meeting with President Tayyip Erdogan.
However, investors are unsettled about possible U.S. sanctions on Turkey despite Erdogan saying there would be no such move. Washington has opposed Turkey's purchase of Russia's S-400 defense systems, set to take place within 10 days.
The downbeat mood was broad, with Russia'a rouble and South Africa's rand falling about 0.4% each.
Saudi Arabia started marketing its debut euro-denominated bonds as the kingdom seeks to diversify its investor base.
A document issued by one of the banks leading the deal showed initial price guidance of around 115 basis points over mid-swaps for an eight-year tranche, and around 170 bps over the same benchmark for a 20-year tranche.
For GRAPHIC on emerging market FX performance 2019, see http://tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance 2019, see https://tmsnrt.rs/2OusNdX
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For CENTRAL EUROPE market report, see
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For RUSSIAN market report, see (Reporting by Sruthi Shankar in Bengaluru; Editing by Andrew Cawthorne)