* South African rand worst weekly performer, down 2.3%
* Russian c.bank hikes rates by most since 2014
* Further Russian rate hikes may not be as strong- ING (Updates after Russian c.bank decision)
By Ambar Warrick
July 23 (Reuters) - Russia's rouble pared early losses on Friday after the central bank hiked interest rates by the most since 2014, while concerns over civil unrest saw the South African rand lagging its emerging market peers for the week.
The rouble traded near three-week highs against the dollar and the euro, after the central bank raised rates by 100 basis points to 6.5%, and signalled more tightening was on the way to curb stubbornly high inflation.
The hike is the fourth this year, as inflation accelerated to near five year highs and with volatile oil markets also hurting the rouble.
"We believe that at least a 25 basis point hike is more or less guaranteed for the second half of this year and, given the expected CPI profile, it is likely to come sooner rather than later," Dmitry Dolgin, Chief Economist, Russia, at ING wrote in a note, referring to consumer price inflation.
"Further hikes are less certain at this point, suggesting that our view on the key rate ceiling in the 6.5-7.0% range still stands."
Anticipation of the hike saw the rouble fare better than most of its peers this week, with the currency set for a 0.3% gain.
MSCI's index of emerging market (EM) equities fell 0.5% on Friday, and was set to lose about 1.6% this week, as it struggled to recover from a steep selldown earlier in the week.
MSCI's currency index fell 0.1%, and was set to lose 0.4% this week.
South Africa's rand lagged its EM peers with a 0.4% fall. Concerns over renewed violence in the country, as well as dovish comments from the central bank put the rand on course for a 2.3% weekly loss, making it the worst EM performer.
South African stocks jumped 0.8% on Friday, marking a strong comeback from losses earlier in the week.
Most EMEA stocks were flat. Hungary's index fell 0.6%, while the forint sank 0.5% against the euro as the European Union sought a two-month delay in talks over the country's pandemic recovery plan.
Relief funding is likely to be delayed over contested issues as part of an "ideological war" with Brussels, nationalist Hungarian Prime Minister Viktor Orban said.
But weakness in the euro, following dovish comments from the European Central Bank, helped most other central European currencies gain. For GRAPHIC on emerging market FX performance in 2021, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see https://tmsnrt.rs/2OusNdX
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(Reporting by Ambar Warrick Editing by Mark Heinrich, Kirsten Donovan)