* China stocks fall; government bonds rally
* Czech c.bank takes cautious approach to further rate cuts
* Turkish lira edge closer to 30 per dollar mark
* Stocks down 0.4%, FX off 0.1%
Jan 5 (Reuters) - Emerging markets assets were set for weekly declines on Friday pressured by a resurgence in the U.S. dollar and Treasury yields as fading investor optimism around early interest rate cuts weakened risk appetite.
For the session, the MSCI's gauge of emerging market stocks nudged down 0.4% at 0921 GMT, while a basket of currencies slipped by 0.1% against the U.S. dollar.
The broader stocks and currencies index were on track for weekly declines of 2.3% and 0.8% respectively. If losses hold, both the indexes would end in red for the first trading week of the new year for the first time since the start of 2022.
The dollar index is set for weekly gains of 1.3%, its best weekly performance since mid-May, while U.S. 10-year yields rose and was last at 4.0249%.
Assets across emerging markets had a strong end to 2023, a rally spurred by the U.S. Federal Reserve's dovish stance.
However, 2024 began with caution as investor optimism on early rate cuts waned after the December Fed meeting minutes failed to offer any timeline for rate cuts, and a strong labour market report added to doubts over an early start to reduced borrowing costs.
Market participants will scrutinise U.S. payrolls numbers due later in the day.
"The fierce rally at the end of last year priced in a more dovish outlook for U.S. rates so we start this year with a higher valuation of most emerging markets (EM) and more sensitivity to any global setbacks," said Hasnain Malik, head of equity research at Tellimer.
"Still, over the year the U.S. rate and dollar backdrop should remain supportive for EM," Malik added.
Heavyweight China stocks fell 0.9%, leading broader equity declines, while government bonds extended gains as 10-year yields,, fell to 2.52%, touching the lowest in nearly four years, on rising expectations of more stimulus to aid the country's recovery.
Across Europe, the Czech crown was steady as minutes from the central bank's policy meeting in December showed officials will take a cautious approach to further interest rate cuts after launching an easing cycle last month.
The Czech crown and Polish zloty will likely lead central and eastern European currency gains in 2024 as interest rate cuts take place more slowly than some have bet, while Warsaw's efforts to unblock European Union funds will also cheer investors, a Reuters poll found.
Turkey's lira touched fresh lows of 29.85, nearing the 30 per dollar mark.
The South African rand dipped 0.3%, and set for weekly losses.
Ghana's official creditors are scheduled to meet on Monday to discuss restructuring some $5.4 billion in loans to the country, three sources told Reuters. (Reporting by Siddarth S in Bengaluru; editing by Barbara Lewis)
