* U.S. reports highest ever daily rise in COVID-19 cases
* China stocks halt rally, weigh on Asian markets
* MSCI EM stocks index still set for second weekly gain
* Polish zloty in focus ahead of Sunday's presidential
election
By Shreyashi Sanyal
July 10 (Reuters) - Emerging markets stocks were set for
their worst day in nearly one month on Friday due to concerns
about rising COVID-19 cases but were expected to clock their
second week of gains on hopes of a gradual, stimulus-induced
pick up in global economic activity.
The mood remained largely off risk in Asia, with Chinese
stocks halting a rally that kicked off on June
29 as state media discouraged retail investors from pushing the
market higher and worries about China-U.S. friction.
The United States on Thursday imposed sanctions on the
highest-ranking Chinese official yet over alleged human rights
abuses against the Uighur Muslim minority.
"What looked to be a minor case of indigestion in Asia might
turn into a full-blown heartburn attack," said Stephen Innes,
chief global market strategist at AxiCorp.
The MSCI's index for emerging market stocks fell
1%, on worries of coronavirus as more than 60,500 new COVID-19
infections were reported across the United States on Thursday,
setting a one-day record.
"Waking up to the snarly U.S. Covid-19 headline shock... one
can't help but feel overly compelled to reduce risk," Innes
added.
The index was, however, set to record its second weekly rise
as investors continued to bet on more fiscal and monetary
stimulus to steer the global economy out of the healthcare
crisis.
Russia's rouble fell 0.3%, while South Africa's rand
slipped 0.5%. The Turkish lira traded flat.
Data showed, Turkey's unemployment rate fell to 12.8% in the
March-May period from 13.2% a month earlier, falling despite an
economic slowdown driven by measures to counter the coronavirus
outbreak.
The Polish zloty edged higher against the euro,
remaining in focus for investors ahead of a presidential
election on Sunday.
Analysts at Commerzbank said political environment will
elevate risk with the election deferred from May still underway.
"In the 2019 general election, ruling PiS lost the senate.
The loss of senate will likely make PiS eager to regain ground
by maintaining high spending, which will deteriorate the
longer-term fiscal outlook."
Other central and eastern European currencies including
Hungary, Romania and the Czech Republic
were higher against the euro.
For GRAPHIC on emerging market FX performance in 2020, see http://tmsnrt.rs/2egbfVh
For GRAPHIC on MSCI emerging index performance in 2020, see https://tmsnrt.rs/2OusNdX
For TOP NEWS across emerging markets
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see
(Reporting by Shreyashi Sanyal in Bengaluru; Editing by Angus
MacSwan)