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China c.bank steps up short-term liquidity injection

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Turkey CA deficit widens less than forecast in Nov

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Egypt's pound weakens to new low

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EM stocks set for longest winning streak since Nov. 2021

Jan 11 (Reuters) - Emerging market stocks hit six-month highs on Wednesday but came off session peaks on caution ahead of U.S. inflation data this week which could sway the Federal Reserve's policy tightening plans.

Developing world currencies, meanwhile, edged up against a steady dollar, briefly hitting seven-month highs and on course to mark their thirteenth straight session of gains.

The EM currencies index has added almost 7.6% since 2022 lows hit in October, helped by China's policy support measures and a broad easing of its COVID-19 curbs as well as tempered interest rate hikes by the Fed.

MSCI's index of emerging market stocks rose 0.1% and was on course to mark its seventh straight day in the black, the longest positive run since November 2021.

Most major indexes in Asia fell, but gains in heavyweights such as Tencent, Alibaba and Baidu as well as in central Europe and South Africa buoyed the broader EM benchmark.

All eyes are on U.S. inflation which is seen having cooled further in December. The data is due on Thursday.

Fed officials this week signalled that the data will help them decide whether they can slow the pace of interest rate hikes, after hiking by more than 400 basis points last year.

"Business surveys point to a slowing U.S. economy and, if inflation allows, the Fed will be in a position to ease policy later this year," said Chris Turner, global head of markets and regional head of research for UK and CEE at ING.

"Commodity markets remain bid on the China rebound story and we expect emerging and commodity FX to remain bid."

But the World Bank on Tuesday warned that fragile economic conditions could be especially hard on emerging market economies.

Egypt's pound hit a new low below 32 to the U.S. dollar as the central bank moved to a more flexible exchange rate under the terms of an International Monetary Fund financial support package.

"The authorities are steadily removing all the restrictions they had placed on allowing access to foreign exchange, and as they are removed, the EGP will lose value until it matches the black market rate," said Stuart Cole, head macro economist at Equiti Capital in London.

"It will take time for the economy to turn around and for the IMF programme to work, assuming it will work. And with the effects of the war in Ukraine still impacting the Egyptian economy and a long way off yet from materially easing, the expectation has to be that the EGP will continue to be devalued."

China's yuan edged up after breaking a rally on Tuesday. China's central bank ramped up liquidity injection on Wednesday, offering fresh funds to the banking system.

South Africa's rand rose 0.3%.

Turkey's lira, which has seen investor interest depreciate over the last year thanks to its unconventional monetary policy, was flat. Data on Wednesday showed Turkey's current account deficit in November widened to $3.666 billion, less than a Reuters forecast.

Russia's rouble edged up. A report showed the country's oil production and exports rose in early January. For GRAPHIC on emerging market FX performance in 2023, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2023, see https://tmsnrt.rs/2OusNdX

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(Reporting by Susan Mathew and Bansari Mayur Kamdar in Bengaluru;Editing by Elaine Hardcastle and Subhranshu Sahu)