* Emerging stocks on track for 1.7 pct weekly loss
* China central bank says to facilitate cross-border capital flows
* Turkish local benchmark bond yields top 15 percent
By Karin Strohecker
LONDON, May 18 (Reuters) - Emerging market currencies were licking their wounds on Friday after another brutal week that saw higher U.S. Treasury yields and a stronger dollar taking their toll, with hotspots Argentina and Turkey on track for a third week of hefty losses.
MSCI emerging market currency index has fallen more than 1 percent over the week – its biggest such decline since November 2016.
Currencies of developing nations have been whacked in recent weeks by the dollar's steady climb with the greenback perching near a five-month peak while U.S. Treasury yields trading well above the psychologically significant 3 percent threshold. Adding to the woes was softer data earlier in the week out of China and with investors closely eyeing the latest twist and turns in the standoff between Washington and Beijing over trade between the world's top two economies.
"As soon as the dollar goes up, of course, emerging market investors shudder," said Jan Dehn, head of research at Ashmore.
Argentina once again took centre stage, with losses racked up early in the week putting the peso on track for a 5 percent tumble since last Friday – its third week of losses of such magnitude. Yet the currency stabilised somewhat on Thursday after the central bank declined for the second day in a row to support the peso, indicating its willingness to let the market find its own level under 25 to the dollar.
The peso hit a series of all-time lows earlier in May, forcing Buenos Aires to request a "high access stand-by arrangement" from the International Monetary Fund (IMF) and the central bank to jack up interest rates to 40 percent.
"It is amazing how quickly Argentina has unravelled," said Stuart Culverhouse at Exotix. "But our sense is that the authorities have stabilised the situation after the currency crisis over the past month with their macro policy response, at least for now."
Turkey's lira flirted with yet another record low on Friday as investors waited to see whether Ankara's central bank will take action to shore up the ailing currency with 10-year benchmark bond yields rising to 15 percent. The lira looked poised for a 3 percent weekly drop in its third week in the red.
And South Africa's rand, Mexico's peso and Russia's rouble are all also on track for a week in the red.
Stock markets painted a similar sombre picture, with MSCI's emerging equity index treading water on the day but on track for a 1.7 percent weekly loss.
However, China mainland stocks rose more than 1 percent on Friday as Beijing's central bank said it would enhance overseas investors' ability to use foreign currencies to invest under the Stock Connect scheme, as part of an effort to facilitate cross-border capital flows.
For GRAPHIC on emerging market FX performance 2018, see tmsnrt.rs/2e7eoml
For GRAPHIC on MSCI emerging index performance 2018, see tmsnrt.rs/2dZbdP5
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For CENTRAL EUROPE market report, see
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For RUSSIAN market report, see
Reporting by Karin Strohecker Editing by Hugh Lawson