By Sujata Rao

LONDON, March 27 (Reuters) - Emerging equities were pressured on Monday by growing concern for so-called Trumpflation trades, although the dollar's retreat to four-month lows allowed currencies such as the rand and rupee to scale multi-month highs.

MSCI's emerging equities flatlined, standing about 1.2 percent off recent two-year highs , as U.S. President Donald Trump's failure to get support from his own party over repealing Obamacare raised doubts about his ability to implement tax cut pledges which have been dubbed Trumpflation.

Sovereign dollar bond yield spreads over Treasuries widened 4 basis points to a one-week high .

But emerging markets received support from the 0.5 percent fall in the U.S. dollar index and lower Treasury yields, while buoyant profits at Chinese manufacturers also offered reassurance on the health of the world's second largest economy.

"To some extent there is concern about the reflation trade but actually the pause in reflation had started a few weeks ago," UBS strategist Manik Narain said, pointing to a recent retreat in cyclical shares as an example.

"A lot now comes down to China and if they can take over the leadership of the global reflation trade."

He said that continued signs of disinflation were making for "a sweet spot for emerging local currency debt" and would likely ensure continued inflows to the sector.

The rand firmed more than 0.5 percent to new 20-month highs against the dollar while benchmark bond yields slipped to the lowest since October 2015 . The currency also received support from firmer gold prices, robust economic data at home and from China, its main export market.

The central bank should keep interest rates steady this Thursday, though bond markets which are pricing a 25 bps cut by end-2017, will likely focus on the tone of the post-meeting statement Goldman Sachs analysts told clients.

"The more benign inflation outlook and recent strengthening of the rand are likely to cause the MPC to soften its tone at its meeting this week...our benign outlook for inflation and dovish rate forecast are likely to continue to support.. the long end of the yield curve," they added.

Russian 10-year yields touched one-week highs after the central bank accompanied a 25 bps rate cut on Friday with some hawkish signals. A dip in oil prices pulled the rouble off five-week highs.

Earlier in the day, the Taiwan dollar surged to a 2-/2-year high while the Indian rupee, South Korean won and Thai baht hit multi-month highs

South Korean stocks however were hit by worries over a diplomatic standoff with China, with Hyundai Motor shares down 1.2 percent after it said production was suspended at one of its Chinese factories for a week.

(Editing by Keith Weir) ((sujata.rao@thomsonreuters.com; +44 20 7542 6176 sujata.rao.thomsonreuters.com@reuters.net))