EMERGING MARKETS-Turkish markets await rate decision; EM stocks flat overall

By Pranav Kashyap and Twesha Dikshit

Sept 11 (Reuters) - Turkish markets nervously awaited a rate decision at 1100 GMT on Thursday, while other emerging market stocks rose slightly.

The lira TRY= slipped and Istanbul stocks .XU100 were marginally higher as traders waited for a decision on a likely 200-basis-point cut with hotter-than-expected inflation and growth limiting the central bank's room for manoeuvre.

Political jitters have also increased since a court last week removed the Istanbul provincial chief of the opposition CHP party — an echo of past flare-ups that spurred flights from Turkish assets.

In the last exodus, rates were raised to steady the lira, but analysts were mostly not inclined to expect a repeat, with the key one-week repo rate currently at 43%.

"There is a risk if they cut too quickly, that may trigger some concerns about monetary policy credibility, therefore the central bank has to be careful," said Jon Harrison, managing director of EM macro strategy at TS Lombard.

"I don't think the political situation is serious enough to warrant another withdrawal of foreign investors."

Romania's leu EURRON= was flat against the euro, while Bucharest's main index .BUX was also flat as investors digested a hotter-than-expected inflation reading. Consumer prices rose 9.85% year-on-year in August from 7.84% in July, boosted by tax hikes.

The U.N. Security Council was scheduled to hold an emergency meeting at Poland's behest to address Russia's violation of Polish airspace, a day after Poland shot down multiple Russian drones that had encroached overnight.

Warsaw's benchmark stock index .WIG20 added 0.7% while the zloty EURPLN= was little changed.

CHINA STOCKS RISE

China was trying to tackle the backlog of unpaid bills owed by local governments to the private sector, estimated to be over $1 trillion, by asking state lenders and policy banks to lend to local authorities, a Bloomberg News report said.

The CSI 300 index .CSI300 and SSE Composite index .SSEC jumped 2.3% and 1.6%, respectively, while most other Asian markets were up after widely pricing in a U.S. Federal Reserve rate cut next week.

A gauge tracking global emerging market stocks .MSCIEF surrendered early gains to stand flat, backing off a four-year high, even as investors rotate into higher-yielding EM assets.

A softer dollar, pressured by expectations of a Fed cut and cracks in the labour market, has burnished the appeal of EM currencies, while political noise around Fed independence has dented confidence in U.S. assets.

In the year to date, MSCI's Eastern Europe share index .MIME00000PUS is up more than 46%, trouncing the S&P 500's .SPX 11%.

Investors poured nearly $45 billion into EM assets in August, the biggest haul in about a year, but sizable outflows from ex‑China equities hinted at appetite cooling, a banking trade group reported.

Elsewhere, Thai consumer confidence dropped for a seventh consecutive month in August to its lowest level in 32 months due to concerns about a slow economic recovery, political instability and U.S. tariffs.

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