EMERGING MARKETS-Dovish Fed lifts EM stocks, China stays under pressure

By Pranav Kashyap and Twesha Dikshit

Sept 4 (Reuters) - Emerging market stocks were mixed on Thursday as investors assessed dovish Federal Reserve signals, though China bucked the trend as it fell for a third straight day.

A gauge tracking emerging market equities .MSCIEF fell 0.4%. A similar gauge for currencies .MIEM00000CUS was flat.

Shanghai stocks .SSEC dropped by 1.2%, while Hong Kong's Hang Seng .HSI lost 1.1%. The blue-chip .CSI300 fell 2.1% and was set for its biggest daily fall in nearly five months.

Reports that regulators may ease short-selling curbs drove profit-taking, curbing investment appetite weeks after an AI-driven surge had drawn money into Chinese equities.

"China quasi-regulatory curbs on excessive speculation may cool the rally but the equity market dividend yield is still higher than government bond yields, which is a powerful driver of local investor capital into stocks," said Hasnain Malik, EM equity and geopolitics strategist, at Tellimer.

Indian equities .NSEI, .BSESN popped up 1% at the open as the government cut consumer taxes on hundreds of products to bolster domestic demand and cushion U.S. tariff pain that has driven the rupee INR=IN to record lows. The currency was steady on the day.

In central and eastern Europe, the Czech crown EURCZK= slipped 0.1%, while equities in Prague .PX inched up 0.2% after data showed inflation slowed in August as expected.

In Thailand, inflation fell more-than-expected in August, data showed. Still, stocks in Bangkok .SETI fell 0.2%, as candidates vie for power following the sacking of the country's prime minister.

Malaysian equities .KLSE were little changed after the central bank held rates steady as expected, citing soft inflation alongside resilient growth.

The mood was more positive after Fed officials, including Governor Christopher Waller, backed rate cuts in the coming months.

Analysts predict emerging markets will also ease rates once the Federal Reserve begins to cut, providing a widespread boost to investor sentiment.

Traders have factored in a cut to interest rates at the Fed's September meeting, the CME Group's FedWatch tool showed.

Signs of strain in U.S. labour data have stirred EM currency volatility and sharpened the focus on jobs prints - with private payrolls due later in the day and non-farm payrolls on Friday.

Talks among Ukraine's allies focused on potential security guarantees if a ceasefire is reached. Ukrainian international dollar bonds were flat, while the Russian rouble RUB= hit a one-month low.

Russian President Vladimir Putin said on Wednesday peace could come via negotiation "if common sense prevails," but he did not rule out ending the war by force.

Turkish stocks .XU100 were on track for their worst week since March 17, as authorities ordered fresh detentions of opposition figures in another legal salvo against President Tayyip Erdogan's rivals.

For TOP NEWS across emerging markets nTOPEMRG

For CENTRAL EUROPE market report, see CEE/

For TURKISH market report, see .IS

For RUSSIAN market report, see RU/RUB