* Stocks, lira, rand falter despite Turkey rate hike
* Markets to face test as Fed is expected to trim bond buys
* Safe-haven assets, commodities regain ground
By Herbert Lash
NEW YORK, Jan 29 (Reuters) - Global equity markets fell on Wednesday and emerging-market currencies slumped on worries that aggressive interest rates hikes by Turkey and South Africa will not be enough to prop up emerging markets, and as an upcoming policy decision by the U.S. Federal Reserve added to jitters over global investing patterns.
The Turkish lira and South African rand fell following a short-lived rally after Turkey's massive 425 basis point rate hike overnight had stirred hopes of breaking a sharp sell-off in emerging markets and reviving risk appetite.
The lira gave back almost two-thirds of an earlier 3 percent surge, stocks in Istanbul buckled and South Africa's rand fell even after its central bank raised interest rates.
Gold rose as stocks in Europe sank to six-week lows and Wall Street stocks fell.
"Our markets are so linked together that if something pulls a trigger, it's like a domino effect. We are not exactly sure how one would impact (the decision of) the other, but things happen fast and investors get quickly nervous," said Joe Saluzzi, co-head of equity trading at Themis Trading in New York.
Major European indexes shed more than 1 percent at one point but a measure of global equity markets. MSCI's all-country index, fell only 0.16 percent.
MSCI's emerging markets index rose slightly, buoyed by gains in Hong Kong's Hang Seng index and mainland China markets.
Investors were also worried that the Fed at the close of its policy meeting on Wednesday afternoon could announce another trimming of U.S. monetary stimulus, something that may exacerbate the emerging markets rout.
The turmoil in emerging markets and recent disappointing U.S. job growth are unlikely to deter the Fed from trimming its bond-buying stimulus, analysts say, as Ben Bernanke wraps up his last policy meeting at the helm of the U.S. central bank.
Removal of the Fed's bond-buying has been a major factor in the emerging markets' sell-off because much of that money has flowed to the higher-yielding assets to be found in these markets. The Fed in December decided to pare its monthly purchases of Treasuries and mortgage-backed securities, designed to drive down long-term borrowing rates, by $10 billion, to $75 billion.
If the Fed reduces its quantitative easing program by another $10 billion, that would likely put further pressure on emerging markets currencies, said Nick Xanders, head of European equity strategy at BTIG in London.
"For the last three years investors have thought that they've put the glass slipper on Cinderella, but actually, when the QE is taken away, you realize it's the ugly stepsister," Xanders said.
The Fed will issue its policy statement at 2 p.m. (1900 GMT) Wednesday.
The Dow Jones industrial average fell 98.26 points, or 0.62 percent, to 15,830.3. The S&P 500 lost 8.36 points, or 0.47 percent, to 1,784.14 and the Nasdaq Composite dropped 20.207 points, or 0.49 percent, to 4,077.756.
In Europe, the pan-regional FTSEurofirst 300 index fell 0.72 percent at 1,288.73. The EuroSTOXX 50 was down 1.0 percent at 3,007.39 points.
Brent crude oil traded above $107 a barrel as investors waited to hear the Fed's decision, with prices supported as concerns of turmoil in emerging economies eased.
Brent rose 19 cents $107.60 a barrel. U.S. oil was down 52 cents to $96.89.
Gold for February delivery rose 1.06 percent to $1,264.1 an ounce.
The dollar weakened against the yen and Swiss franc as traders reckoned emergency action taken to stabilize Turkish markets would not be enough to calm jitters over global emerging markets.
The dollar turned 0.64 percent lower at 102.29 yen, holding above the seven-week low set on Monday. The dollar edged down 0.16 percent against the Swiss franc at 0.8957 franc .
U.S. government bond prices rose, with the 10-year note 8/32 in price to yield 2.7168 percent.
Bund futures were up 0.31 percent at 142.9 euros.