UPDATE 1-INTERVIEW-OECD plays down emerging markets selloff risk

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By Emma Ross-Thomas

ISTANBUL, June 27 (Reuters) - The head of the Organisation for Economic Co-operation and Development (OECD) said on Wednesday he did not believe there was a risk of an emerging markets selloff due to global monetary tightening.

"I don't think the whole situation today is conducive to any kind of very dramatic or very unexpected events," OECD Secretary General Angel Gurria told Reuters, when asked whether there was a risk of an emerging markets selloff amid global tightening.

Emerging markets have been hit by expectations that U.S. interest rates will not fall soon, or may even rise further.

Weak stock markets, due partly to concerns about the exposure of U.S. lenders to subprime mortgages, have also reduced investor interest in risky assets around the world.

"Very importantly in emerging countries the fiscal position, the debt position, the FX position, the reserve position is a lot better than it has ever been in terms of their stability," Gurria said on the sidelines of an OECD conference in Istanbul.

Recent sharp falls on the Shanghai stock exchange and the subprime mortgages concerns had not caused a wide global selloff and instead showed that markets had readjusted. "All in all the reactions were very, very fast to go back to the status quo," Gurria said.

The struggles of two hedge funds managed by Bear Stearns have refocused attention on defaults in U.S. subprime mortgages -- lending to borrowers with weak credit histories -- and on whether such problems will have an adverse impact on the broader U.S. economy and financial markets.

"No, I think it is part of the process of the system taking care of itself," Gurria said, when asked whether the struggles of the hedge funds would prompt a wider selloff.

But such jitters have prompted investors to unwind some carry trades by buying back the low-yielding yen against higher-yielding currencies, said a trader for a major Japanese bank, adding that such position unwinding was still relatively mild.