EMERGING MARKETS-Emerging market stocks rise from three-week low; Polish assets extend slide

Polish assets extended declines on Tuesday amid heightened uncertainty following eurosceptic Karol Nawrocki's presidential election win, while Turkish stocks jumped following a softer inflation print.

The MSCI index of emerging market equities was up 0.4%, rebounding from a three-week closing low in the previous session, as investors looked to potential talks between U.S. President Donald Trump and Chinese leader Xi Jinping aimed at ironing out differences on trade. The broader currency index was steady for the day.

"Trump having a call with President Xi this week is supporting the risk environment slightly," said Chris Turner, global head of markets at ING. Poland's blue-chip index WIG20 sank 1.7%, set for its fourth straight day of losses, and the zloty local currency slipped 0.5% against the euro for its fourth consecutive session.

Selling pressures persisted after Nawrocki's narrow presidential election victory on Sunday. Critics fear that Nawrocki could use his presidential veto powers to stymie Prime Minister Donald Tusk's liberal policy agenda. Tusk said on Monday he would call for a parliamentary vote of confidence in his coalition government.

"Some investors may fear that Tusk's coalition will fracture in the absence of a clear pathway to legislation, but we think the parties will hang together for fear of hanging separately," J.P. Morgan strategist David Aserkoff said. Additionally, the stage was set for the National Bank of Poland's interest rate decision on Wednesday, with a broader consensus pointing to a "hold" verdict by the central bank.

Meanwhile, Turkish annual inflation dipped to 35.41% in May, less than half the level of more than 75% that it reached a year earlier. The lower-than-expected reading bolstered expectations for interest rate cuts, boosting shares of Turkish banks by 5.4%. The country's main stock index, BIST 100, surged 2.7%, set for its best day since May 12.

The lira was flat in volatile trading. The currency had hit record lows against the U.S. dollar in March when Istanbul Mayor Ekrem Imamoglu - President Tayyip Erdogan's main political rival - was jailed pending trial on graft charges. Attention was also on further trade developments after a report said the White House instructed countries to provide their best offer on trade negotiations by Wednesday.

Back in Central and Eastern Europe, Hungary's forint fell 0.2% against the euro, following modest gains in the previous session, as data showed the country's economy stagnated in the first quarter. In Romania, the local currency leu was flat for the day.

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