EMERGING MARKETS-Turkish lira firms on hopes of improving U.S. ties, EM stocks falter again

(Corrects date of S. Africa budget in paragraph 11 to Oct. 24 from Oct. 26)

* Asia gloom persists, rupee slides after WPI data

* Saudi riyal under pressure from Khashoggi case

* Bank stocks lead rally on Turkey's main stock index

By Sruthi Shankar and Aaron Saldanha

Oct 15 (Reuters) - Turkey's lira and stocks rose on Monday on hopes of a thaw in relations between Ankara and Washington while a late rally last week on Wall Street offered little respite for other emerging market stocks, which hovered near 1-1/2-year lows.

Emerging markets were under pressure on worries of the U.S.-China trade dispute hitting China's economy. Chinese blue-chips closed 1.4 percent lower while Saudi Arabia's riyal weakened on rising tensions between Riyadh and the West over the disappearance of journalist Jamal Khashoggi.

The riyal was quoted at its weakest since June 2017 after the kingdom warned against threats to punish it over last week's disappearance of journalist Jamal Khashoggi. Turkey believes he was killed in the Saudi consulate in Istanbul. Saudi Arabia has denied that.

Rising oil prices weighed on Asian markets, with India's rupee crossing 74 to the dollar level after wholesale prices for September rose above expectations.

However gains for Russia's rouble and Turkey's lira kept the MSCI index of emerging market currencies steady.

China's yuan eased after the central bank chief said there was still room for further adjustments in interest rates and banks' reserve requirement ratios (RRRs) to support the economy if needed.

Investors were nervous ahead the U.S. Treasury's semi-annual report on foreign exchange practices on whether China would be labelled as a currency manipulator, despite several reports stating that would not be the case.

Turkey's lira gained for a second day after the release and return of a detained U.S. pastor, Andrew Brunson, offered relief to the currency that has shed more than 35 percent in value this year. The country's BIST 100 stock index rose 1.3 percent, led by a rally in the banking shares ahead of a central bank meeting next week.

"The lira is likely to benefit at least modestly during the period between now and the CBT meeting of 25 October where we anticipate the next 300 bps rate hike," ING analysts wrote in a note.

"This geopolitical story was at best a distraction – the real issue about the lira is the lack of inflation targeting by the central bank."

South Africa's rand also firmed after ratings agency Moody's on Friday opted to hold off publishing a review of the country's debt. Market participants are awaiting the mid-term budget to be delivered by new Finance Minister Tito Mboweni on Oct. 24.

"Right now it looks like there is a wait-and-see approach but also a bit of momentum in the rand thanks to platinum and commodities in general," said Per Hammarlund, chief EM strategist at SEB.

Gold prices jumped nearly 1 percent to hit a near 12-week high, while platinum touched its highest since late July as global uncertainties drove demand for the metals.

For GRAPHIC on emerging market FX performance 2018, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance 2018, see https://tmsnrt.rs/2OusNdX

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For RUSSIAN market report, see (Reporting by Sruthi Shankar and Aaron Saldanha in Bengaluru Editing by Andrew Heavens)