* EM FX nervous after China's yuan falls to one-yr low
* EM stocks see biggest jump in 11 days but down on week
* Bond yields on rise, Fitch warns of sovereign downgrades
By Emma Rumney
LONDON, July 20 (Reuters) - The latest slide in China's yuan kept emerging markets in the firing line on Friday after another week of turbulence caused by continuing trade war fears and an increasingly powerful dollar.
The yuan has stumbled back to its lowest point in over one year, sparking talk of intervention by China's central bank after U.S. President Donald Trump stoked concerns with comments on the path of U.S. interest rates.
After bouncing back in earlier trading, the offshore yuan dropped again by more than half a percent to as low as 6.8358 per dollar, its lowest level since June 27, 2017.
The yuan capped its sixth straight week of decline against the greenback, extending its fall over the last few months to almost 8 percent.
China's trade feud with the United States and its efforts to devalue the yuan to gain an edge have pushed the currency into an even steeper fall than during its 2015 devaluation, when it took one and a half years to fall by 10 percent.
"People are just a little bit nervous about what is going on," asset manager UBP's EM Macro and FX strategist Koon Chow told Reuters. "So despite a bit of stability and what looks like an intervention [from Beijing] to stabilise the currency, risk appetite is a little bit depressed."
However, the yuan's decline also helped push Chinese mainland stocks up by some 2 percent, snapping a five-day losing streak, while MSCI's emerging market index saw its biggest rise in 11 days, albeit as part of its fifth weekly fall in the last six.
Other emerging market currencies were largely treading water after Trump's unprecedented criticism of Federal Reserve policy shocked markets and halted a dollar rally.
Still, emerging majors including South Africa's rand, Mexico's peso and Russia's rouble were on track for weekly losses, with Turkey's lira the only exception.
The lira looked poised to deliver a small weekly gain amid increasing expectations the Turkish central bank would be forced to deliver an interest rate hike next week and after a near 6 percent tumble last week.
Yields on local emerging market currency debt rose again to over 6.6 percent and the overall JP Morgan EM FX index fell, closing at its lowest in over a year, as concerns around global trade reduced risk appetite.
Weekly data that tracks global asset flows meanwhile showed that EM stocks saw $1.9 billion and a ninth straight week of selling by the world's investment funds.
Asia is the big focus. The Indian rupee touched a record low of 69.13 per dollar and Indonesia said it too had intervened to stabilise its currency, the rupiah, as it dropped to an almost 3-year trough.
Korea's won is also looking fragile, UBP's Chow said. It has already dropped over 7 percent in recent months and the South Korean economy is one of the most closely entwined with China's.
Rating agency Fitch meanwhile weighed in on both the trade war and the rapid rise in the dollar.
James McCormack, Fitch's head of sovereign ratings, said that the trade battle between the United States and China would not trigger a spate of credit rating downgrades, but the dollar's charge could if it continues.
There is a 20-year pattern of downgrades for poorer countries whenever the U.S. currency strengthens and their FX reserves drop. EM ratings fell 1-1.5 notches on average between 2013 and 2017 when the greenback surged 30 percent.
"When EM dollar income is growing faster than local currency income, in that environment we are tending to upgrade sovereigns; when it is the other way round we are tending to downgrade sovereigns. That is the relationship that has always held," McCormack said.
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Additional reporting by Marc Jones Editing by Mark Heinrich