EMERGING MARKETS-Turkey's lira recovers from all-time low; EM shares decline

* Lira up on more back-door measures ahead of rate meeting

* Dollar steady; Fed minutes due at 02:00 PM ET

* Russian rouble steady; geopolitical tensions in Belarus in focus

* S.African rand at two-week high

* Spillover from S&P 500’s record run overnight fades

Aug 19 (Reuters) - Turkey’s lira firmed on Wednesday after the central bank signaled higher borrowing costs, while upbeat sentiment after the S&P 500 index hit a record high overnight proved brief as an index of emerging market stocks erased early gains.

Ahead of a rate setting meeting on Thursday, Turkey’s central bank on Tuesday halved banks’ borrowing limits for overnight transactions in the interbank money market, signaling that borrowing costs will move to a higher rate of 11.25%.

“A larger share of the refinancing now has to be covered at higher interest rates. So in many ways it was equivalent to a rate hike: refinancing costs rose,” said Ulrich Leuchtmann, an FX analyst at Commerzbank.

That helped the currency rise 0.2% against the dollar and on pace for a second straight session of gains. The lira ended a four-day losing run on Tuesday that saw it hit new lows almost everyday.

While analysts’ expectations for an interest rate hike have increased, the central bank has so far taken back-door steps to tighten policy. A Reuters poll expects Turkey’s key interest rate to remain unchanged at Thursday’s meeting.

With the dollar steady, investors are awaiting minutes of the U.S. Federal Reserve’s previous meeting for any clues on policy shift. Most other emerging market currencies made minor moves.

Russia’s rouble was flat. Focus was on the political situation in Belarus, where opposition politician Sviatlana Tsikhanouskaya appealed to the European Union not to recognize what she said were fraudulent presidential elections.

Markets are now watching for how Russia will respond to the biggest political crisis facing an ex-Soviet neighbor since 2014 in Ukraine, when Moscow intervened militarily after a friendly leader was toppled by public protests.

South Africa’s rand hit a two-week peak, boosted by the weekend’s decision to ease coronavirus lockdowns as the economy, already in contraction before the pandemic, welcomed the restart of domestic activity.

Ailing state electricity utility Eskom on Tuesday resumed planned power cuts with further outages due on Wednesday. Eskom’s struggles to power Africa’s most industrialized economy are one of the main reasons why investors are downbeat on the growth outlook.

Johannesburg shares lost 0.3% as materials drag.

Broader EM peers slipped 0.3% after an early rally in Asia shares due to lingering worries about what lay ahead for U.S.-China trade talks and wider concerns about the asset class’s capacity to recover from the pandemic.

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For RUSSIAN market report, see (Reporting by Susan Mathew in Bengaluru; Editing by Amy Caren Daniel)