* EM assets set for mild gains in Jan * South Korea, Taiwan stocks among worst weekly performers * Russia’s rouble lags EMEA peers this week Jan 29 (Reuters) - Emerging market stocks fell on Friday, set for their worst week in four months, as a surge in COVID-19 cases and doubts over the rollout of vaccine programmes dented risk appetite and boosted the safe-haven U.S. dollar against most currencies. The MSCI’s index of emerging market (EM) stocks dropped 0.7% and was set to shed nearly 3.8% this week, as it retreated from record highs hit earlier in the week. However, the index was still poised to notch a monthly gain. Rising COVID-19 cases and concerns over the rollout of the vaccine across emerging markets dampened appetite for their assets, with investors also scrutinizing high-stock valuations as economic trends showed little improvement. A short-squeeze on the Wall Street also sent waves across global equities, as markets feared a trimming in long positions by major hedge funds. In Europe, the Middle East and Africa, Turkish, South African and Russian stocks continued to retreat from recent all-time peaks. South Korean and Taiwan stocks were among the worst weekly performers in broader EM as foreign investors unwound large positions. “Recent EM performance has been volatile across asset classes,” said Christian Keller, head of economics research at Barclays. “We believe this has been driven by shifting expectations of U.S. fiscal policy support, ongoing concerns about COVID lockdowns and slow vaccine rollouts, their effect on EM growth and fiscal outcomes, as well as political risks.” Emerging currency markets also fell, with the dollar benefiting from an increased safe-haven demand as volatility grew across risk-driven assets. The Russian rouble, which led losses across EMEA on Thursday, was set to widely underperform its regional peers this week as political concerns weighed. The unit was on track to close the week lower by more than 1%. Losses in Turkey’s lira were offset by the central bank’s commitment to maintain tight monetary policy until inflation was managed. The currency was among the few units trading positive for the week. Most EM units were set to gain in January due to initial optimism over an economic recovery. But, doubts over the swiftness of recovery crept into markets towards the end of the month. The Czech crown was set to outpace its central European peers this week on the back of increased bets that the central bank could hike rates twice this year. For GRAPHIC on emerging market FX performance in 2021, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see 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 Ambar Warrick in Bengaluru, Editing by Sherry Jacob-Phillips)