(There will be no EMEA-focused emerging markets report on Monday on account of UK Spring Bank holiday. Reuters will resume coverage on Tuesday, May 28.)

* Chinese shares close around 1% lower, HK down as well

* EM stocks down 0.7%, set for weekly losses

May 24 (Reuters) - Most emerging market currencies were on track for weekly losses on Friday as ebbing expectations for Federal Reserve interest rate cuts supported the dollar, while developing world stocks were set for their first weekly drop in five.

Shares in China closed around 1% lower as global risk sentiment soured on the prospects of U.S. rates remaining elevated for longer following recent data and hawkish minutes from the Fed's last policy meeting.

Data on Thursday showed weekly jobless claims fell last week, pointing to underlying strength in the labour market, while a separate reading showed U.S. business activity accelerated to its highest level in just over two years in May.

"Indications across the board were that the U.S. economy continues to fire on all cylinders, defying some other leading indicators that had hinted at the possibility of a slowdown," analysts at Monex Europe said in a note.

MSCI's index for emerging market stocks shed 0.7%, on track to log a weekly fall of over 1%. Shares in Hong Kong were the worst hit this week amongst major EMs, down close to 5%.

The EM stocks index had touched an over two-year high earlier this week as global investors bet the Fed could kick-off its rate easing cycle soon. However, the recent re-adjustment has weighed on EMs and pushed the dollar higher.

China's yuan recorded its biggest weekly fall in over two months in onshore trading, hovering near its lowest level in close to four weeks at 7.24 per dollar.

Investors also kept tabs on geopolitics as China staged mock missile strikes in waters east of Taiwan and dispatched fighter jets carrying live missiles and bombers as part of two-day exercises, state television CCTV said.

Currencies in Central Eastern Europe were muted, though most were set for weekly losses with Poland's zloty the worst hit.

South Africa's rand edged 0.2% higher, though on track for steep weekly losses heading into general elections next week.

Stocks in Johannesburg shed 0.3%, their fourth successive daily decline.

Russia's rouble rose 0.3% against the dollar, on track to extend gains to a tenth straight session.

EM debt saw inflows for the second straight week in the week to Wednesday, while equities saw inflows for the first time in three weeks, Bank of America data showed.


** IMF, Pakistan make significant progress on new loan, IMF mission says

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(Reporting by Shashwat Chauhan in Bengaluru; Editing by Nick Macfie)