EMERGING MARKETS-South African rand leads forex gains on improving factory data

* Turkey’s lira helped by lower-than-expected inflation

* South Africa’s rand extends gains into sixth session

* Trump diagnosis raises uncertainty over U.S. elections

Oct 5 (Reuters) - Emerging market currencies inched up on Monday amid uncertainty over U.S. President Donald Trump’s health, while South Africa’s rand outperformed as factory activity neared growth territory.

The rand jumped more than 0.6%, extending gains into a sixth session, as a survey of the country’s private sector activity showed a softer decline in September on easing lockdown restrictions. The reading was just a few points shy of a level that indicates growth in the sector.

After steep losses during the onset of the coronavirus pandemic - which had seen South Africa implement strict curbs on economic and social activity - the rand has clawed back to levels last seen in March. But aftershocks from the pandemic continue to be felt in the economy, which was in dire straits even before the outbreak.

South African stocks were a touch higher, mirroring mild gains across developing world equities. Trump’s positive test for COVID-19 last week had caused some pullback in risk appetite as investors fretted over how it could affect the upcoming U.S. presidential elections.

Trump could be discharged from hospital as soon as Monday, according to his doctors, although his condition remains unclear and outside experts warn his case may be severe.

“The biggest issue for the FX market is: it is uncertain whether this has made the biggest risk of the U.S. elections – a long political and legal battle about the result – any more or less likely,” Ulrich Leuchtmann, head of FX and commodity research at Commerzbank wrote in a note.

Still, sentiment appeared to be improving on Monday, after better-than-expected business activity readings from the euro zone.

But spiking coronavirus cases in parts of the bloc have raised concerns over a fresh batch of lockdowns.

Central European stocks and currencies rose slightly.

Turkey’s lira rose 0.4%, while stocks added 0.8% as consumer price inflation edged down to a lower-than-forecast 11.75% year-on-year in September, reflecting some progress in the country’s bid to combat runaway inflation. But September’s reading was still well above the central bank’s target.

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