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EMERGING MARKETS-Turkish lira, banks in fresh selloff on US trial fears

LONDON, Dec 1 (Reuters) - Turkish lira and bank stocks fell on Friday, extending losses and lagging other emerging markets after U.S. trial testimony implicated President Tayyip Erdogan in a plan to help Iran evade sanctions.

A pullback in the dollar along with generally buoyant factory data across the developing world did not lift emerging market assets much, with MSCI's emergng equity index down a quarter percent to two-week lows.

Markets were pressured by PMI data showing Chinese manufacturing growing at the slowest pace in five months as well, while MSCI's index of emerging technology stocks is set for its biggest lossmaking week in a year, down 6.4 percent .

Emerging currencies were mostly weaker to the greenback which is seen benefiting from U.S. tax cut plans, though its passage by the Senate has been adjourned to Friday.

The lira weakened the most, staying a whisker off record lows though expectations of policy tightening lifted the currency earlier this week, putting it on track for small weekly gains.

"The (lira) stability owes (something) to the fact that presidential advisers verbally intervened by signaling a rate hike," said Nomura economist Inan Demir, who expects a rate rise of 75-100 basis points.

He said markets had expected Erdogan or his family to be mentioned during the trial but were relieved the mention was based on hearsay and that no evidence had yet been presented. Turkey has dismissed the accusations of sanctions-busting as politically motivated.

There are also fears of fines on Turkish banks, pushing Istanbul's bank shares index 1.3 percent lower.

State-run Halkbank shares fell 0.9 percent while its 2021 bond touched 10-month lows and Vakifbank shares tumbled 4.3 percent

But Demir said the case was still "about individuals not the about the institutional entity of Halkbank. It could result in sentences for those individuals, but not on the bank itself."

One bright spot was the PMI which showed manufacturing growing for the ninth month in a row. That mirrored solid growth elsewhere, including in central Europe and Russia .

"These are very encouraging numbers, which show economic resilience to geopolitical noise," said Simon Quijano-Evans, a strategist at Legal & General Investment Management.

"The most important thing for EM is that the private sector starts showing it is disregarding political noise and gets on with its job and that is creating growth and jobs and the PMIs are showing this."

For GRAPHIC on emerging market FX performance 2017, see http://tmsnrt.rs/2e7eoml For GRAPHIC on MSCI emerging index performance 2017, see http://tmsnrt.rs/2dZbdP5

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see)

(Additional reporting by Claire Milhench, Editing by William Maclean)