EMERGING MARKETS-Rouble recovers from sanctions hit; S.African rand leads weekly gains

* Rand up nearly 3% this week

* Turkish lira falls as dovish c.bank weighs

* MSCI EM FX index set for best week in 4 months

By Ambar Warrick

April 16 (Reuters) - Russia's rouble rebounded on Friday after steep losses on fresh sanctions from the United States, while Turkey's lira fell sharply after investors saw the new central bank governor as striking a dovish tone.

The rouble jumped 1.2% on Friday, with Morgan Stanley and JPMorgan both forecasting a bigger interest rate hike by the central bank, following U.S. sanctions on the country's debt market.

The rouble had tumbled nearly 1% on Thursday after Washington announced sanctions on Russia over alleged election interference and malicious cyber activity. Russian bonds were also stable after settling higher at the end of a volatile session on Thursday.

Still, the rouble was set to end the week higher after gains made early in the week and as the U.S. dollar fell along with Treasury yields.

South Africa's rand was a standout performer this week across Europe, the Middle East and Africa, as its relatively higher yield and stable political conditions helped it outpace peers in the region.

The currency fell 0.4% on Friday from a 15-month high, but was set for a weekly gain of nearly 3%. The South African central bank also said the country's markets are unlikely to be disrupted by a normalisation in global monetary policy.

The MSCI's index of emerging market currencies rose 0.2% on Friday, and was set for its best week in four months as investors wound down expectations of policy tightening by the Federal Reserve.

Turkey's lira marked steep losses on Friday, after the central bank held rates but did not reiterate a pledge of continued rate hikes to combat inflation and support the lira.

The country also banned the use of cryptocurrencies and crypto assets to purchase goods and services.

"There was some concern that the monetary policy committee statement had removed a sentence about readiness to deliver more rate hikes if required, and also removing the promise to keep monetary policy decisively tight for an extended period of time," Tatha Ghose, FX and EM analyst at Commerzbank said in a note.

Emerging market stocks rose on Friday, and were set to end the week higher. Sentiment was boosted by record first-quarter GDP data from China, which pointed to strong domestic and overseas demand. For GRAPHIC on emerging market FX performance in 2021, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see https://tmsnrt.rs/2OusNdX

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For RUSSIAN market report, see (Reporting by Ambar Warrick in Bengaluru; Editing by Ana Nicolaci da Costa)