CORRECTED-EMERGING MARKETS-Oil exporters feel more pain; Azeri manat down 32 pct as peg scrapped

(Corrects manat devaluation rate in headline and para 6)

LONDON, Dec 21 (Reuters) - Oil’s retreat to 11-year lows inflicted more pain on energy exporting emerging markets on Monday, driving down currencies and stocks and forcing Azerbaijan to abandon efforts to support its manat currency.

Brent crude is now at 2004 lows on signs that the supply glut will not ease any time soon. That has boosted markets in swathes of the developing world, especially Asia, taking MSCI’s emerging equity index 0.3 percent higher.

Bourses in Seoul, Mumbai and Taipei rallied and mainland Chinese markets closed 1.8-2.0 percent higher while most regional currencies were lifted by a higher central bank fixing for the yuan.

But UBS strategist Manik Narain called the equity gains “a dead cat bounce,” adding that pressure on U.S. junk bonds and stocks would filter back into emerging assets, especially given the oil backdrop.

“There is a risk for many emerging markets now. Moving from $60 down to $40 is very different from moving from $40 down to $20 a barrel,” Narain said.

Another so-called petro-peg tumbled as Azerbaijan unshackled the manat, allowing it to fall around 32 percent to the dollar to 1.55. The manat closed Friday at 1.0435. Analysts had predicted the move after neighbouring Kazakhstan floated its tenge, which is down 47 percent this year.

Since February the manat has been pegged to a euro-dollar basket.

Its move will refocus attention on the Gulf where governments have shown determination to cling on to currency pegs. All the currencies have weakened in forward markets against the dollar .

“There will be a focus both on oil-affected currencies generally, and on the elephant (or camel) in the room - the Saudi riyal peg remains firmly in place but underneath the sand, the pressure is building steadily,” Societe Generale wrote.

Saudi stocks were flat after a big fall on Sunday but Qatar’s index pulled back 0.7 percent though Dubai, less oriented towards oil, gained.

In Russia, while stocks rose almost 1 percent, the rouble inched lower, standing just off 3-1/2-month lows to the dollar. Kazakhstan’s tenge hit another record low.

Ukrainian dollar bond prices fell up to 1 cent as Kiev entered a 10-day grace period on a $3 billion bond owed to Russia. It has declared a moratorium on the issue .

Central European currencies were led higher by the zloty at three-week highs to the euro after last week’s raft of strong data while the Serbian dinar briefly touched two-week highs after a ratings outlook upgrade.

Investors are bracing for further volatility in Brazil when markets there open, following the replacement of respected finance minister Joaquin Levy with a leftist economist Nelson Barbosa who may ease up on fiscal belt-tightening to spur growth .

Brazilian stocks fell to new 6-1/2-year lows on Friday while the real fell 1 percent on fears of more ratings downgrades and expectations that without tighter fiscal policy, interest rates will not have room to fall as expected in 2016.

“It will be seen as a dilution of the commitment to fiscal austerity and that puts pressure on the central bank to do more in terms of having to raise rates to keep markets stable,” Narain of UBS said.

“The currency had quite a big move on Friday..but in the short run there is room for disappointment to continue.”

For GRAPHIC on emerging market FX performance 2015, see

For GRAPHIC on MSCI emerging index performance 2015, see

For GRAPHIC on MSCI emerging Europe performance 2015, see

For GRAPHIC on MSCI frontier index performance 2015, see

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see ) (Additional reporting by Claire Milhench; Editing by Hugh Lawson)