* S&P to review South Africa's credit rating

* EM stocks down 0.1%, FX off 0.2%

* Both indexes set for weekly gains

May 17 (Reuters) - Most currencies in emerging Europe edged lower on Friday as optimism that the U.S. Federal Reserve will start cutting interest rates soon appeared to taper off following cautious comments from policymakers.

Hungary's forint lagged local peers, falling 0.4% against the euro, while the Czech crown held steady at 24.69 per euro, hovering near a four-month high.

Romania's leu was last trading at 4.97 per euro, while Poland's zloty slipped 0.3%.

"The increasing risk appetite driven by expectations regarding the interest rate development in the U.S. is a positive factor for the local currencies," Erste Group analysts said in a note.

"Further, relatively hawkish stance of central banks in the region and solid economic growth also favour appreciation against the euro."

EM assets, generally regarded as risky, have flourished after data earlier in the week showed U.S. consumer prices increased less than expected in April, bolstering hopes that the Federal Reserve could kick-start its policy easing cycle as early as September.

However, while data this week offered the Fed good news on two fronts, policymakers haven't openly shifted views yet about the timing of rate cuts which investors are convinced will start this year.

Turkey's lira was last trading at 32.29 per dollar, while the local stock index jumped over 1%.

South Africa's rand edged 0.1% lower against the dollar, hovering near a five-month high ahead of S&P Global's review of the country's sovereign credit rating.

Johannesburg shares slipped 0.6%, while most bourses in Central Eastern Europe turned lower, with Hungarian shares down 1.1%, while stocks in Warsaw dipped 0.9%.

As of 0830 GMT, MSCI's index for emerging market stocks edged 0.1% lower, while stocks slipped 0.2%, both on track for their fourth successive weekly gain.

Chinese bourses closed over 1% higher, with property-related stocks jumping after Beijing announced "historic" steps to stabilise the crisis-hit property sector, allowing local governments to buy "some" apartments, relaxing mortgage rules and pledging to deliver unfinished homes.

EM debt saw inflows of $500 mln in the week to Wednesday, while equities saw outflows for the second straight week, Bank of America data showed.


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(Reporting by Shashwat Chauhan in Bengaluru; Editing by Kim Coghill)