UPDATE 2-Turkey's Erdogan said to welcome embassies' statements amid expulsions row

* Erdogan summoned cabinet to discuss expelling 10 envoys

* They had sought release of philanthropist Osman Kavala

* Expulsions would open wide rift with the West (Adds comment from opposition, press, academic on reducing tensions)

By Tuvan Gumrukcu and Jonathan Spicer

ANKARA, Oct 25 (Reuters) - Turkish President Tayyip Erdogan welcomed statements on Monday by several Western embassies including the United States that they abide by a diplomatic convention not to interfere in a host country's internal affairs, state-run media said.

The statements were made almost simultaneously on Twitter as Erdogan entered a Cabinet meeting to discuss expelling ambassadors from 10 embassies, a move that would open Turkey's deepest diplomatic rift with the West in his 19 years in power.

The statements were seen to cool tensions after Erdogan said at the weekend he had ordered the envoys to be declared "persona non grata" for calling for the release of Osman Kavala, a philanthropist detained for four years on charges of financing protests and involvement in an attempted coup. He denies the charges.

"The United States notes that it maintains compliance with Article 41 of the Vienna Convention on Diplomatic Relations," the U.S. Embassy said on Twitter.

The other nine embassies - Germany, France, Canada, Netherlands, New Zealand, Norway, Sweden, Denmark and Finland - published similar messages or re-tweeted the U.S. message.

State-run Anadolu news agency, citing sources in the presidency, reported that Erdogan had "welcomed" the statements. Anadolu and state broadcaster TRT described the statements as "a step back" by the embassies.

"Diplomatic missions continuing their work by abiding by this principle will always be welcomed in terms of improving ties between their countries and ours," Omer Celik, spokesman for Erdogan's AK Party, said of the Vienna Convention article cited by the embassies.

Erdogan's weekend order had not yet been implemented by the Foreign Ministry but could yet be formally approved at Monday's Cabinet meeting.

In response to Monday's developments, the Turkish lira rallied after earlier hitting an all-time low of 9.85 to the U.S. dollar, and was at 9.585 at 1457 GMT. It has lost almost a quarter of its value this year.

CRISIS OVER?

The crisis over the expulsion of the ambassadors "has been resolved," Huseyin Bagci, an international relations professor at the Middle East Technical University (METU), told broadcaster Haberturk.

A diplomatic source said the embassies were "cautiously hopeful" but added it was unclear what Erdogan would ultimately decide to do.

The 10 ambassadors represent NATO allies, trade partners and members of the European Union, which Turkey aspires to join despite widening differences with the bloc.

Unal Cevikoz, an opposition Republican People's Party (CHP) lawmaker and former Turkish ambassador, said on Twitter: "It is understood that efforts to prevent the 10 ambassadors being declared 'persona non grata' have yielded results. The success of diplomacy was seen once again."

CONCERNED INVESTORS

Kavala, a businessman and contributor to civil society groups, is charged with financing nationwide protests in 2013 and involvement in a failed coup in 2016. He has been held in detention while his trial continues.

Rights groups say his case is emblematic of a crackdown on dissent under Erdogan. Kavala said on Friday he would no longer attend his trial, as a fair hearing was impossible after recent comments by the president.

The diplomatic tension has added to investor concerns about Turkey's economy after the central bank, under pressure from Erdogan to support growth, unexpectedly slashed interest rates by 200 points last week despite inflation rising to nearly 20%.

The 10 envoys were summoned by the foreign ministry last week after calling for a just and speedy resolution to Kavala's case, and for his "urgent release".

Parliament speaker Mustafa Sentop said earlier on Monday that Turkey's constitution banned discussion of active court cases, including by Turkish politicians in parliament, and that the envoys' statement marked a "clear and disrespectful" interference.

The European Court of Human Rights called for Kavala's release two years ago, saying there was no reasonable suspicion he had committed an offence and finding his detention had been intended to silence him. (Additional reporting by Ece Toksabay and Sabine Siebold; Writing by Dominic Evans, Editing by Timothy Heritage and Grant McCool)