While the Indian rupee and Turkish lira skidded to new record lows against the dollar and the Indonesian rupiah slumped to fresh four-year lows, currencies such as the Mexican peso and the Korean won that have so far been spared the worst of the recent selloff, are also now feeling the heat.

Market expectations that the U.S. Federal Reserve will start cutting back its $85 billion-a-month money printing program from September were maintained after minutes from the U.S. central bank's July meeting gave little new guidance on timing. That drove a fresh spike in U.S. 10-year yields, the risk-free rate against which all assets, including emerging markets, are benchmarked.

"U.S. yields will go higher - that is obvious - and no one wants to be exposed to assets in emerging markets which are very sensitive to U.S. monetary policy," said Maarten-Jan Bakkum, investment strategist for ING Investment Management's emerging market funds.

As U.S. Treasury yields hit new two-year highs - they stand around 120 basis points higher than early-May levels - more and more investors dumped emerging assets.

Emerging equities fell for the fifth straight session to bring 2013 losses to 13 percent <.MSCIEF>. Bonds in emerging currencies also sold off with average yields at almost 7 percent on the main GBI-EM index - the highest in more than two years.

Currency weakening accelerated, forcing central banks to step up their efforts to stem it.

Turkey pledged to increase dollar sales to sell $350 million on Thursday after the lira hit a record low for the second day in a row but analysts called for more steps. Turkish stocks shed over 2 percent <.XU100> while bond yields rose.

"We expect further interest rate hikes or even an emergency monetary policy meeting," said Ali Cakiroglu, a strategist at HSBC in Istanbul.

Earlier, the Indian rupee fell another 1.5 percent to plumb a new low past 65 per dollar, bringing losses since the start of this week to around 5 percent.

Indonesia too suffered fresh losses and capital outflows, triggering a warning from Fitch that weak policy management could affect credit ratings for it and for India

Brazil will offer $4 billion on the spot market on Thursday, boosting its efforts to curb the real's losses. The currency has tumbled to near five-year lows despite some $30 billion in central bank interventions via the swap markets.

The rand slumped to a new four-year low

MORE EMERGING MARKETS HIT

ING's Bakkum said bearishness had now extended beyond India, South Africa, Turkey, Indonesia and Brazil - markets that were hit first because of their reliance on foreign capital.

"The five that were in focus so far are obvious victims as they need external capital to fund themselves but there are also worries about economic growth," he said.

"Countries such as Thailand and Mexico that had strong capital inflows and credit growth are also looking vulnerable as their growth expectations were based on assumptions of strong capital flows."

Data from Malaysia confirmed the worsening fundamentals of emerging markets, showing an economic slowdown and an evaporating current account surplus. That pushed the ringgit to three-year lows.

The Thai baht too fell to three-year lows, forcing the central bank to reassure markets it would act if needed, while the Korean won fell to two-week lows.

Selling has also hit the Mexican peso which lost 2 percent on Wednesday while Russia's rouble sank to almost a four-year low versus a euro-dollar basket and data showed central bank dollar sales of $3.7 billion in August.

Analysts are reluctant to call the end of the selloff. Of the trillions of dollars that flooded into emerging markets over the past decade, they note that very little has actually exited, indicating scope for more huge outflows.

Data from Lipper, a Thomson Reuters company, shows that in the three months to end-July, global emerging equity funds it tracks saw net outflows of about $8 billion. That equates to just under 2 percent of total assets under management.

Funds dedicated to emerging dollar debt have shed a net $1 billion this year compared to $124 billion in assets, it says.

"In the medium and long term we are positive about emerging markets. Flows into the asset class reflect a structural rather than cyclical change in global asset allocation," said Thanasis Petronikolos, head of emerging debt at Baring Asset Management.

"But in the short term there will be more fluctuations."

(For GRAPHIC on MSCI emerging index performance 2013, see http://link.reuters.com/weh36s

(Additional reporting by Joel Dimmock in London; editing by Stephen Nisbet)

By Sujata Rao