* Stocks up 1.2%, FX edge 0.1% higher

* Turkish June manufacturing confidence down to 106.4 points vs 109.4 in May

* EM debt sees $2.8 bln outflows in the week to Wednesday - BofA

June 24 (Reuters) - Stocks in emerging markets advanced more than 1% on Friday, as a drop in commodity prices eased investor fears over stubborn inflation, while a softer U.S. dollar lifted most regional currencies at the end of a turbulent week.

MSCI's gauge of EM stocks jumped 1.2%, as weaker metals and crude prices lifted risk sentiment since energy and food have been the key drivers of inflation.

Still, the index was on track for its worst quarter since early 2020 during a COVID-driven rout.

EM currencies including the South African rand, the Chinese yuan and Mexico's peso rose between 0.1% and 0.3% as the U.S. dollar weakened against most peers.

Both indexes have been rattled in recent weeks on worries about the outlook for EM assets and fears that aggressive rate-hiking cycles will hurt economic growth.

"The macro backdrop (around a global recession) creates additional policy challenges for emerging markets, where tightening is already well-underway, but inflation pressures are not yet abating," said VanEck EM Fixed Income economist Natalia Gurushina.

"But one EM region that can afford to proceed gradually with policy normalization is EM Asia - regional headline inflation is much closer to the official targets than either in EMEA and LATAM."

Most stocks and currencies in Asia firmed, though the Indonesian rupiah and the Philippine peso slipped 0.1% and 0.6%, respectively, a day after Bank Indonesia held rates steady at a record low and Philippine's central bank announced a modest rate hike.

The Turkish lira was flat a day after the country's central bank stood pat on its policy rate for the sixth straight month. Business confidence among Turkish manufacturers fell to 106.4 points in June, compared with 109.4 points last month, central bank data showed.

"Turkey's key rate and inflation gap are the highest among major economies by a wide margin - the USDTRY is hitting a glass ceiling of around 17.36, exactly twice as high as a year ago and close to the shock highs of December," said Alex Kuptsikevich, senior market analyst at FxPro.

"The national currency shall act as a compensating mechanism, but it cannot do so to its full extent because of the strict capital controls, which only further restrain economic growth, preventing it from restarting the economic engine."

Weekly data from the Bank of America showed that EM debt funds lost $2.8 billion in an 11th straight week of outflows in the week ended Wednesday, while regional equity funds saw $300 million depart.

For GRAPHIC on emerging market FX performance in 2022, see http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2022, see https://tmsnrt.rs/2OusNdX

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For RUSSIAN market report, see (Reporting by Anisha Sircar in Bengaluru; Editing by Sherry Jacob-Phillips)