* EM stocks index on course to make back last week's losses
* China, Turkey among those reporting surge in COVID cases
By Susan Mathew
Aug 4 (Reuters) - Emerging market stocks carried on a strong handover from Wall Street overnight, looking to extend gains for a third straight session on Wednesday, while an index of developing market currencies climbed to a one-month peak.
Rising cases of the Delta variant of the coronavirus kept sentiment in check, with China and Turkey among the countries reporting a surge in cases.
After the S&P 500 hit record highs, MSCI's index of emerging market (EM) equities jumped 1% as Chinese and Hong Kong shares gained after recent volatility, while stocks in Turkey, South Africa, Russia, Poland and Hungary all rose between 0.3% and 0.7%.
The Russian benchmark is about 2.5% away from record highs, while the broader EM index is on course to make back last week's losses that were spurred by rising crackdowns by China on some of its business sectors.
"Rising Delta variant COVID-19 cases are not yet dampening market expectations. But they easily could," said Robert Carnell, regional head of research, Asia-Pacific, at ING.
"The return of COVID to China is our biggest concern. Aggressive measures should bring it under control - the question is how fast, and at what economic cost."
Economists said China, the world's second biggest economy, may need more monetary and fiscal easing to halt an economic slowdown. Data on Wednesday showed growth in China's services sector accelerated in July, but the pandemic threatens to undercut the momentum.
As EM currencies rallied against a subdued dollar, their index jumped 0.3%.
South Africa's rand hit a new three-week high, while Russia's rouble is near more than one-month highs, extending gains to the eighth straight session - its longest winning streak since February. Data showed Russia's services PMI expanded in July, but at its slowest pace since February.
Markets awaited details of Russia's foreign currency purchases for the month ahead and two auctions of OFZ treasury bonds.
As the number of daily coronavirus cases in Turkey jumped to nearly 25,000, the highest in almost three months, the lira lagged, off Tuesday's near two-month highs.
The Belarusian rouble lost 0.2% and was set for its worst session in four weeks as political tensions weighed. A wave of protests were triggered by an election last year which the opposition says was rigged to keep President Alexander Lukashenko in power. Since then, Western powers have impose sanctions on the country.
Hungary's forint inched closer to four-week highs against the euro, cheered by retail sales data that showed a rise in June.
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 CENTRAL EUROPE market report, see
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For RUSSIAN market report, see
(Reporting by Susan Mathew in Bengaluru Editing by Mark Potter)
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