Stocks hit 3-week lows; S.African rand cuts losses after inflation data

Stocks hit 3-week lows; S.African rand cuts losses after inflation data

* S.African inflation rises more than expected

* Other EM FX down as dollar finds footing

* Mainland China stocks, yuan slump amid growth worries

* Romanian leu slides 0.7%

By Susan Mathew

Aug 24 (Reuters) - Emerging market stocks hit three-week lows on Wednesday as worries about recession and U.S. monetary policy tightening weighed, while South Africa's rand moved off session lows after a faster-than-expected rise in inflation.

The rand ZAR= , which had tripped 0.4% to 17.067 against the dollar earlier in the session, cut some losses to trade at 17.03 after data showed headline consumer price inflation quickened to 7.8% year-on-year in July from 7.4% in June, and above expectations of a 7.7% rise.

"Local inflation is showing some stickiness above the Reserve Bank's 6% ceiling... The figure will maintain the hawkish tint towards South African Reserve Bank's monetary policy," said Shaun Murison, senior market analyst at IG.

He added the rand's movement off late has largely been dictated by offshore catalysts such as the trajectory of U.S. monetary policy. The currency is down about 6% this year.

Riskier currencies had received a boost on Tuesday after weak U.S. PMIs and housing data saw investors scale back bets for another aggressive rate hike by the Federal Reserve next month.

But the safe-haven dollar soon found a footing as risk sentiment remained subdued amid recession worries as recent data has signalled cooling economic growth in China and the euro zone as well.

Some analysts held the view the Fed might still raise interest rates by 75 basis points next month - its third by that magnitude this year - raising anticipation for Fed Chair Jerome Powell's speech at a central bank symposium at Jackson Hole, Wyoming, later this week.

Among stocks, indexes in mainland China .SSEC .CSI300 lost almost 2%, while Hong Kong tripped .HSI 1.3% as investors worried Beijing's support measures might not be enough to bring the world's second largest economy out of a slump.

The Chinese yuan CNY= slumped 0.4%, setting the tone for Asian peers.

Elsewhere, stocks in Turkey .XU100 and Poland .WIG also slumped, with the latter hitting one-month lows.

The broader emerging market stocks index .MSCIEF was down 0.5%, extending losses to a fifth consecutive session.

In central and eastern Europe, worries about economic growth exacerbated by reducing Russian gas supplies kept sentiment pressured. The Romanian leu EURRON= , which usually remains range bound thanks to central bank interventions, slumped 0.7% against the euro, giving back all of Tuesday's gains.

Russia's rouble RUB= stayed at around the 60 mark to the dollar and euro. July industrial output in the country, due later in the day, is seen worsening from June amid sanctions on the country over its invasion of Ukraine.

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Reporting by Susan Mathew in Bengaluru; Editing by Krishna
Chandra Eluri