EMERGING MARKETS-With Fed out of way, emerging markets await Turkish cbank

LONDON, Dec 14 (Reuters) - Emerging equities rose to a near two-week high on Thursday after the U.S. Fed delivered a widely-expected rate rise but remained cautious on the inflation outlook, while Turkey's lira slipped before a central bank meeting.

MSCI's benchmark emerging equities index gained 0.2 percent after the Federal Reserve raised rates by a quarter percent but said weakness in inflation remained a concern.

The average yield spread of emerging dollar debt over U.S. Treasuries narrowed to 287 basis points (bps), off a two-week high of 291 bps.

"We would need to see an incredible pick up in inflation and rate hikes to impact emerging markets but at present there is no basis for such an assumption (that there would be pick up in pace of rate hikes)," said Esther Reichelt, a strategist at Commerzbank in Frankfurt.

"Generally, markets are correct to be calm."

The dollar weakened against a basket of currencies and U.S. yields fell, but some emerging currencies struggled nonetheless to make gains as investors awaited central bank decisions.

The most closely-eyed is Turkey, where a Reuters poll predicted the bank to raise its late liquidity window rate by 100 bps to combat inflation at 14-year high, even though President Tayyip Erdogan opposes higher rates.

The lira eased 0.5 percent, slipping off one-month highs. It has firmed recently on the back of strong economic growth and rate rise expectations.

"If they don't deliver we definitely see a higher risk for the lira to depreciate," Reichelt said. "They need to prove to the market they are ready to act despite the political pressure, otherwise markets will lose all trust in the central bank."

She added that if the bank failed to meet market expectations, the lira could go into a "depreciation spiral", breaching the key 4 (per dollar) mark.

Earlier, China's yuan hit two-week highs and stocks fell 0.6 percent after the central bank raised money market rates to prevent destabilising capital outflows.

Ten-year Chinese bond yields fell 2-3 basis points as some had expected a bigger move, a trader said.

The South African rand weakened 0.4 percent. While data showed the current account deficit narrowing slightly , politics weighed, with a judge instructing President Jacob Zuma to set up a judicial inquiry into state influence-peddling.

Shares in South Africa's precious metals miner Sibanye-Stillwater fell 1.6 percent to two-month lows after it agreed to buy platinum producer Lonmin.

Later in the day, Mexico is seen hiking rates by 25 basis points to counter an inflation uptick. The peso slipped 0.3 percent after firming around 0.8 percent on Wednesday.

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) Emerging Markets Prices from Reuters

Equities Latest Net Chg % Chg % Chg

on year

Morgan Stanley

Emrg Mkt Indx 1122.01 +3.20 +0.29 +30.12 Czech Rep 1063.09 +3.17 +0.30 +15.35 Poland 2424.97 +15.51 +0.64 +24.49 Hungary 38281.45 +53.29 +0.14 +19.62 Romania 7537.01 -9.06 -0.12 +6.38 Greece 756.95 +7.19 +0.96 +17.60 Russia 1147.90 +6.40 +0.56 -0.38 South Africa 51252.88 +101.61 +0.20 +16.74 Turkey 08646.03 +492.88 +0.46 +39.04 China 3293.58 -9.46 -0.29 +6.12 India 33077.83 +24.79 +0.08 +24.23 Currencies Latest Prev Local Local close currency currency

% change % change

in 2017

Czech Rep 25.68 25.65 -0.08 +5.19

Poland 4.22 4.22 -0.06 +4.39

Hungary 314.10 314.39 +0.09 -1.68

Romania 4.63 4.63 -0.01 -2.06

Serbia 119.11 119.27 +0.13 +3.56

Russia 58.59 58.53 -0.11 +4.56

Kazakhstan 335.12 335.46 +0.10 -0.44

Ukraine 27.40 27.26 -0.51 -1.46

South Africa 13.50 13.45 -0.38 +1.73

Kenya 103.18 103.10 -0.08 -0.79

Israel 3.52 3.52 +0.02 +9.38

Turkey 3.83 3.81 -0.54 -7.96

China 6.61 6.62 +0.15 +5.08

India 64.32 64.45 +0.20 +5.63

Brazil 3.31 3.31 -0.00 -1.71

Mexico 19.07 19.01 -0.31 +8.62

Debt Index Strip Spd Chg %Rtn Index

Sov'gn Debt EMBIG 314 -2 .05 8 05.59 1

All data taken from Reuters at 09:38 GMT. Currency percent change calculated from the daily U.S. close at 2130 GMT. (Reporting by Claire Milhench; additional reporting by Sujata Rao, Editing by Angus MacSwan)