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GLOBAL MARKETS-Turkish lira back on the rack as Fed keeps markets on edge

* Stocks, Lira, Rand falter as Turkey rate hike relief falters

* Markets will face test as Fed is expected to trim bond buys

* Safe-haven assets, commodities regain ground

* Wall Street expected to open lower

LONDON, Jan 29 (Reuters) - Turkey's lira and other emerging market currencies were back under pressure on Wednesday as expectations the Federal Reserve will press on with stimulus cuts later in the day reheated doubts over developing markets' appeal for investors.

The Turkish central bank's massive 425 basis point interest rate hike overnight had stirred hopes of breaking the vicious cycle of selling in emerging markets and reviving risk appetite.

But the cracks were already beginning to reappear in another turbulent session in Europe. The lira gave back almost two-thirds of an earlier 3 percent surge, stocks in Istanbul buckled, and South Africa's rand fell ahead of a rate-setting meeting there.

"Certainly a bit of shock and awe on the rate hike but you do have to wonder, if this doesn't work in arresting the decline in the lira, what other measures the Turkish central bank has?" said Michael Hewson senior analyst at CMC Markets.

"Do you jack up rates again? ... My big concern is they start talking about capital controls."

With the U.S. Federal Reserve expected to press on with cutting back its huge stimulus later in the day, and the central bank meeting in South Africa, another of the countries caught up in the recent developing market storm, a hectic few hours be in store.

Recently polled analysts did not expect South Africa to move rates, but CMC's Hewson suspected they now would following Turkey's move and a hike in India on Tuesday. "They need to get out in front of the curve," he said.

European shares had initially ridden the wave of optimism that spilled in from Asia, but Britain's FTSE 100, Germany's DAX and France's CAC 40 all saw gains slashed to 0.1-0.2 percent by early afternoon.

Turkey's hike had been a far larger than expected 425 basis points increase that took the overnight lending rate all the way to 12 percent.

But early hopes it had stemmed the rout in the lira appeared to evaporate fast as it slumped from 2.1650 per dollar to 2.2290, pulling Monday's historic low of 2.39 back into view.

FED

Later in the session, the Fed is widely expected to trim its asset-buying programme by another $10 billion a month, after the conclusion of its two-day policy meeting.

This 'tapering' process has been a major factor in the recent emerging market sell-off, because much of the Fed's largesse has flowed to the higher-yielding assets to be found in these markets.

The dollar was largely biding its time ahead of the meeting but with EM jitters bubbling again, traditional safe havens such as the yen, German Bunds and gold were all in demand..

"The Fed has claimed numerous times that they are setting monetary policy based only on the U.S. economy, so volatility elsewhere is not going to sway their decision for now," said Luke Bartholomew, fixed income strategist at Aberdeen Asset Management in London.

With South Africa's rate decision at 1300 GMT zooming into view MSCI's emerging equity index saw its day's gains roughly halved to 0.7 percent.

And as Treasury yields edged higher ahead of the 1900 GMT Fed decision, U.S. futures turned negative having originally pointing to a positive start for Wall Street.

Among commodities, Brent oil edged up toward $108 a barrel ahead of U.S. inventory data due later in the day. Safe haven gold meanwhile nudged back up to $1,259.80 an ounce though it was some way short of Monday's high of $1,278.01.