* IMF urges global central bank coordination * Euro slides after inflation data * Commodities lower on stronger dollar, growth fears * Chinese New Year holiday closures curb activity By Rodrigo Campos NEW YORK, Jan 31 (Reuters) - Emerging market stocks and currencies extended their slide on Friday on fears of a protracted capital flight, while a gauge of global equities fell, on track to close its worst month in almost two years. European and U.S. stock markets fell, cutting initial losses sharply, but could not prevent MSCI's global index from heading to its largest monthly decline since May 2012. Emerging market stocks were down 6.8 percent for the month, the worst start to a year since 2008. Adding to pressure in emerging market currencies from Turkey to South Africa in previous sessions, the Russian rouble and Polish zloty slid against the U.S. dollar. Government borrowing costs jumped across weaker economies despite local policymakers' efforts to stanch the bleeding. Concern about growth in China and other emerging markets triggered the selling in developing economies late last week, with focus on countries with internal political and economic issues, like Ukraine and Argentina. The U.S. Federal Reserve's decision this week to continue to withdraw its monetary stimulus - one of the reasons for the flow of cash into emerging markets in recent years - compounded the problems in emerging economies. "Pressure has now returned to haunt the key emerging market currencies whose central banks have so far raised the cost of borrowing, but pressure valves are also now being tested elsewhere," said Andrew Wilkinson, chief market analyst at Interactive Brokers LLC in Greenwich, Connecticut. Major U.S. stock indexes came off their session lows, with the S&P 500 trimming its losses by half, partly as short sellers bought in after sharp declines in stock indexes. "I think the shorts are taking off some risk heading into the weekend. It's been a decent couple of weeks for them and they are adjusting their positions as this week (and) this month come to an end," said JJ Kinahan, chief strategist at TD Ameritrade in Chicago. The Dow Jones industrial average fell 70.65 points, or 0.45 percent, at 15,777.96. The Standard & Poor's 500 Index was down 3.82 points, or 0.21 percent, at 1,790.37. The Nasdaq Composite Index was down 6.01 points, or 0.15 percent, at 4,117.11. The FTSEurofirst 300 index of top European shares closed down 0.24 percent after dropping nearly 1.7 percent at its session low. In a move seen directly pressuring the Fed and European Central Bank, the International Monetary Fund urged central banks to ensure that a financial market rout in the developing world does not lead to an international funding crunch. "I have been saying that the U.S. should worry about the effects of its policies on the rest of the world," Reserve Bank of India Governor Raghuram Rajan said on Friday, a day after slamming what he said was a breakdown in global monetary coordination. Poland delayed publication of its monthly debt supply plan until next week due to market turbulence and an overhaul of its pension scheme, a day after Hungary scrapped a bond sale because of a sudden spike in rates. EURO FALLS Euro zone consumer price inflation dropped in January, bucking market expectations and putting downward pressure on the single currency. Inflation slowed back to 0.7 percent, the same level as when the ECB, which meets next Thursday, caught markets off guard with a rate cut in November. Unemployment remained at a record high. The euro was last down 0.4 percent versus the U.S. dollar, trading at $1.3505. "The focus on the euro is that we could see a policy response from the ECB next week," said Shaun Osborne, chief foreign exchange strategist at TD Securities in Toronto. MONEY FLOWING OUT OF EM Fund investors worldwide pulled $6.4 billion from emerging market stock funds in the week ended January 29, marking their biggest outflows since August 2011, data from a Bank of America Merrill Lynch Global Research report showed. The grab for safer assets meant the dollar had the upper hand in the currency market, pressuring commodities already weakened by the prospects of slower growth. U.S. Treasuries prices rose on month-end buying and a safety run, putting safe-haven bonds on track to notch their strongest gains in 20 months. "The risk-off theme continues. You have money coming out of equities and into Treasuries. It's also definitely helping with month-end buying," said Justin Lederer, Treasury strategist at Cantor Fitzgerald in New York. The benchmark 10-year U.S. Treasury note was up 6/32, the yield at 2.6712 percent. Gold was caught between the run to safety and the surge in the greenback, and spot prices dipped 0.2 percent. The precious metal was down more than 2 percent for the week but on track to post its first monthly gain since last August. Brent oil fell 1.0 percent and U.S. crude was little changed. Copper fell 0.6 percent to set a monthly drop of more than 4 percent, the largest since last June. "The absence of the Chinese market for the next week means that we may see some further downside on commodities, especially if we do see the dollar gaining ground," said Tim Radford, of Sydney-based metals adviser Rivkin. Chinese markets were closed for the New Year holiday and will remained closed into next week.