EMERGING MARKETS-Stocks hit 3-month lows as tech losses mount, Turkey inflation rises

By Ragini Mathur and Sudeshna Ghoshal

Nov 3 (Reuters) - MSCI's emerging market stock index fell to a more than three month-low on Tuesday as higher-than-expected Turkish inflation, a selloff in tech-heavy Asian markets and escalating tensions in the Middle East deterred investors.

The equity index .MSCIEF fell 1.7% to its lowest since late July.

Last month, the index recorded its steepest monthly decline since March when markets were shaken by the outbreak of the US-Israeli war with Iran.

Tuesday's selloff was led by technology-heavy markets in South Korea .KS11 and Taiwan .TWII, both of which closed 3.6% lower. Disappointing US corporate earnings revived concerns that debt-funded spending on AI infrastructure may not generate returns quickly enough.

Pressure on the index was recently compounded by elevated oil prices, uncertainty over the US midterm elections, a surprise re-election of Brazil's leftist President Luiz Inacio Lula da Silva and an MSCI proposal that could downgrade Indonesia.

MSCI's emerging-market currency index .MIEM00000CUS slipped 0.2%.

Turkish consumer prices rose 2.58% month-on-month in October, data showed on Tuesday, above a Reuters poll forecast of 2.4%, driven by clothing and food costs. Annual inflation stood at 29.77%, compared with expectations of 29.56%. The lira was steady, while the BIST 100 .XU100 fell 0.7%.

Turkish equities have come under sustained pressure, falling about 17% in September and 10% in October. MSCI's decision to freeze certain index changes and its warning that Turkey could lose emerging-market status by June 2027 also weighed on sentiment. The benchmark is down about 3% this year and on track to end a seven-year winning streak.

South African stocks .JTOPI fell 0.7% and the rand weakened 0.2% after the US Trade Representative said South Africa and Rwanda would be suspended from the African Growth and Opportunity Act from January 1, 2027.

Oil rose more than $1 after dropping over 7% in the previous session. Prices climbed after an Iranian official said a deal to end the war remained distant and the US struck Iran's Qeshm Island, raising fears of further disruption to regional energy supplies.O/R

"The main transmission channel is the conflict with Iran," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. "Investors will parse what the upcoming midterm election results will mean for the (Trump) administration's next move in the Middle East."

Ahead of US midterm elections on Tuesday, polls favoured the Democrats to win the House of Representatives while the Senate race remained closely contested.

In emerging Europe, the Hungarian forint and Polish zloty each weakened 0.2% against the euro. Poland's WIG .WIG share index fell 0.7%, while Hungary's BUX .BUX lost 0.6%. Investors were also watching a widening dispute in Poland over control of the judiciary, alongside a Polish rate decision on Wednesday and a Czech central bank meeting on Thursday.

In China, the onshore yuan weakened 0.4%, ending a 13-session winning streak, after the central bank tightened onshore dollar liquidity to curb the currency's rapid appreciation. The Shanghai Composite .SSEC fell more than 1%.

The Financial Times reported that China's securities regulator had asked investment banks to pause initial public offerings and share sales to support weak markets.

HIGHLIGHTS:

** China rolls out support measures to aid struggling stocks

** India needs equity capital, finance minister says amid tax relief calls

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