LONDON, Sept 1 (Reuters) - A raft of weak economic data kept emerging assets on the ropes on Tuesday, with stocks extending August's heavy losses and central banks scrambling to control currencies' relentless slide against the dollar.
Data showed Chinese and Taiwanese manufacturing contracted at the fastest pace in three years while South Korean exports fell the most in six years, reflecting weakness within emerging economies as well as their overseas markets.
Emerging stocks fell 1.5 percent, after drops of between 1 and 2 percent in Chinese, Korean, Taiwanese and Indian shares , while an oil price pullback hit Gulf and Russian markets .
The emerging index fell 9 percent in August, the worst monthly loss since May 2012.
Currencies hovered near multi-year lows against the dollar, though Asian units were lifted by a Chinese move to tighten rules on yuan forward trading. The move raised offshore-traded yuan 0.4 percent to a two-week high.
Currencies such as Malaysian ringgit and Korean won rose as much as 1 percent after the report but were not expected to advance further due to weak growth and investor flight from emerging markets.
"We've had a wide range of data all of which is showing that despite what many perceived to be tailwinds for emerging markets -- lower oil prices and improvements in developed economies -- we are not seeing any pick up in growth," said UBS strategist Manik Narain.
"The data also shows exporters having to cut export prices... all that shows weakness in emerging equities and currencies is likely to persist."
Morgan Stanley advised clients to trim emerging equity allocations, predicting an 11 percent year-on-year fall in earnings per share (EPS) and only modest recovery in 2016.
They reiterated a preference within the sector for companies with dollar revenues and local cost bases due to weak emerging currencies.
Central banks have resorted to various measures to stem currency volatility, with Turkey on Monday raising reserve ratios on banks' short-term forex borrowing.
The lira showed little reaction, standing 3 percent off record lows hit a week ago.
But Turkish shares fell 1 percent as political risk escalated. Losses were led by conglomerate Koza Ipek , which fell more than 10 percent after police raids on the company linked to dissident cleric Fethullah Gulen .
With elections set for November, Turkey's economy has also slowed, with manufacturing contracting in August for the sixth month out of the last eight.
Central European manufacturing too slowed in August, with Poland at 11-month lows, Hungary's under long-term averages and Czech PMI also below forecast.
Polish and Hungarian stocks were down almost 2 percent while currencies weakened versus the euro .
Russian markets posted bigger losses, with the rouble down 2.5 percent. South African stocks, also heavily geared to China, fell 1.5 percent while the rand lost 0.3 percent to the dollar.
For GRAPHIC on emerging market FX performance 2015, see link.reuters.com/jus35t
For GRAPHIC on MSCI emerging index performance 2015, see link.reuters.com/weh36s
For GRAPHIC on MSCI emerging Europe performance 2015, see link.reuters.com/jun28s
For GRAPHIC on MSCI frontier index performance 2015, see link.reuters.com/zyh97s
For CENTRAL EUROPE market report, see
For TURKISH market report, see
For RUSSIAN market report, see ) (Editing by Keith Weir)