* MSCI's EM stocks index edges up 0.1%
* U.S. considering sanctions on Chinese firm Hikvision - report
* Shanghai Composite and CSI 300 index each fall half a percent
* Turkish lira 0.5% softer, stocks 0.2% lower
By Aaron Saldanha
May 22 (Reuters) - Emerging market stocks marked time on Wednesday, as did developing world currencies against the dollar, with risk appetite capped by fears of an escalation in the U.S.-China trade dispute.
A report on Tuesday said the United States is considering Huawei-like sanctions on video surveillance firm Hikvision , sending the firm's Shenzhen-listed shares down 5.5% and deepening worries that trade friction between the world's top two economies could be further inflamed.
Amy Yuan Zhuang, chief analyst at Nordea Markets, wrote in a note that the prospect of a U.S.-China trade deal was weakened by the mistrust between the two nations, although a "cosmetic agreement is in the interests of both sides."
MSCI's developing world stocks index consolidated gains from Tuesday's session, which lifted it off a more than four-month trough hit at the start of the week.
The Shanghai Composite slid 0.5%, as did Chinese blue-chips. Turkey's lira slid 0.5%, while its benchmark stocks index dipped 0.2%, as losses among industrials outweighed gains in the communications services sector.
Turkish Defence Minister Hulusi Akar said late on Tuesday that while he sees an improvement in talks with the United States over the purchase of Russian S-400 defence systems and U.S. F-35 fighter jets, Ankara was also preparing for potential U.S. sanctions.
Russia's rouble edged firmer, while stocks ticked up 0.1%.
South Africa's rand was 0.1% firmer. Headline consumer inflation in Africa's most industrialised economy slowed to 4.4% year on year in April from 4.5% in March, data showed.
The country's central bank is due to review the repo rate on Thursday, with a Reuters poll predicting it will be left unchanged at 6.75%.
Johannesburg-traded stocks declined 0.4%. Sasol slid 12.9% after the world's top maker of coal-derived motor fuel raised its cost estimate for a project in the United States by about $1 billion.
Currencies in emerging Europe were broadly weaker against the euro, with the Polish zloty 0.1% softer.
Data for April showed Polish producer prices rose by 2.6% year-on-year, slightly above the 2.5% analysts polled by Reuters had expected.
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For RUSSIAN market report, see (Reporting by Aaron Saldanha in Bengaluru, Editing by William Maclean)