By Susan Mathew
June 11 (Reuters) - Emerging markets gained on Tuesday as the Chinese government moved to support its stocks and currency, but new tariff threats in the U.S-China trade war kept risk appetite subdued.
MSCI's emerging-market shares index rose to its highest in nearly a month and was last up 0.6%. Mainland China shares, which have the biggest weight on the index, rose 2.6% and 3%.
China's government signalled further funding for infrastructure investments in an effort to boost growth, fuelling appetite for infrastructure stocks. Other Asian markets also rose.
Stocks in Turkey and South Africa followed, gaining 0.5% each, buoyed by a migration deal between United and Mexico that averted tariffs on Mexican goods.
But U.S. President Donald Trump said he was ready to impose another round of tariffs on Chinese imports if no progress is made in trade talks with Chinese President Xi Jinping at a G20 summit later this month, tainting sentiment.
"While President Trump's swift resolution of the dispute with Mexico is positive, we see a bumpier road ahead for negotiations with China," said Mark Haefele, chief investment officer at UBS Global Wealth Management.
"Our base case is for a deal to be reached eventually, but focus is now turning to the G20 summit at the end of the month, and we see only a 20% chance that an agreement is announced by then."
The Chinese yuan gained 0.3% after dropping to its weakest in more than six months on Monday, on a stronger-than-expected midpoint and the central bank's plan to issue bills in Hong Kong later this month.
South Africa's rand rose for a third day with no further escalation in the government's internal dispute on the central bank's mandate. "Investors are now turning their attention to data releases on manufacturing, retail sales and business confidence to further gauge the economy's health," Lukman Otunuga, research analyst at FXTM, said in a note.
Advances by Turkey's lira were kept in check as Washington stepped up pressure on Ankara over Turkish plans to buy a Russian air defense system.
The Turkish central bank's first policy change since a rate increase in September is coming closer, most analysts in a Reuters poll predicted. But they expect the bank to leave rates unchanged at Wednesday's meeting.
However, Russia's central bank is expected to cut interest rates on Friday, according to a Reuters poll, opening the door for a further easing cycle later this year. The rouble was 0.3% firmer.
The Czech crown gained. The central bank governor, Jiri Rusnok, said it would be better if the current pause in monetary policy changes were followed by higher borrowing costs because rates are still not at normal levels.
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 RUSSIAN market report, see (Reporting by Susan Mathew in Bengaluru; editing by Larry King)