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EMERGING MARKETS-Stocks, FX ease after November rally; China unsteady recovery weighs

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Czech economy contracts 0.5% in Q3

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S&P unexpectedly revises Turkey's outlook to positive

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Foreign flows into Indian bonds hit 6-year high

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Stocks, FX on course for weekly gains

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Stocks down 0.5%, FX off 0.2% on day

By Johann M Cherian

Dec 1 (Reuters) - Most stocks and currencies in developing markets took a breather on Friday, following a strong finish to November, while a factory activity survey out of China fanned concerns about recovery in the world's second-largest economy.

MSCI's gauge for emerging market equities slipped 0.5%, while a basket of currencies weakened 0.2% against the dollar by 0931 GMT.

Both the indexes are on course for their third-straight week in gains, with the currencies index up 0.3%, and the equities index up 0.2%.

The indexes had rallied in the previous month, as investors warmed to riskier emerging market assets on optimism that interest rate hikes in the U.S. have peaked.

Meanwhile, heavy-weight China's blue-chips stocks and Hong Kong's main index shed 0.4% and 1.3%, respectively after a private manufacturing survey showed factory activity unexpectedly rose to 50.7 in November, contrasting an official survey on Thursday.

"Policy support should remain a tailwind over the coming months," said analysts at Capital Economics.

"Fiscal policy will be kept loose for some time, with special bond quotas set to be distributed by end-December."

Mutual funds that hold bonds are selling like hot cakes in China as investors bet the central bank will cut interest rates further to aid the struggling economy.

India's benchmark indexes and rose 0.6%, a day after the country blew past growth estimates for the July-September quarter. Economists now project the local economy to grow at a 6.7% to 7% rate in the fiscal year ending March 31, 2024.

Separately, foreign inflows into Indian government bonds hit the highest level in six years in November ahead of the securities being included in JPMorgan's emerging market index next year.

Turkey's BIST 100 stock index advanced 1.0% after ratings agency S&P Global Ratings revised Turkey's sovereign credit outlook to positive from stable on subsiding twin deficits.

Traders also await a ratings decision by S&P Global on Poland. The zloty was flat.

Czech's crown inched 0.2% lower after data showed gross domestic product fell 0.5% on a quarterly basis, deeper than a flash estimate of 0.3%.

Markets were also keeping a keen eye on oil prices that pared some losses after tumbling the previous session on perceptions that the voluntary oil output cuts agreed by OPEC+ producers were underwhelming.

Elsewhere, Russia's rouble weakened to 89.8 to the dollar, while South Africa's rand inched 0.7% up.

Later in the day, investors will parse Federal Reserve Chair Jerome Powell's remarks for his thoughts on monetary policy outlook following Thursday's cooler-than-expected U.S. inflation reading. (Reporting by Johann M Cherian in Bengaluru; Editing by Sharon Singleton)

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