Oct 26 (Reuters) – Worries about U.S. interest rates remaining higher for longer sparked a selloff across most emerging markets on Thursday, sending stocks to a fresh 11-month low, while investors awaited Turkey’s interest rate decision.

MSCI’s index tracking EM stocks .MSCIEF dropped 1.2% as yield on U.S. 10-year tenors, a mark for interest rate expectations, edged up by 0909 GMT.

Equities across developing markets have been hovering near lows last seen in November as investors price in higher borrowing costs amid signs of a resilient U.S. economy.

Such expectations have bolstered the dollar, driving a basket of emerging markets currencies .MIEM00000CUS down 0.2% to a near one-week low.

Turkey’s monetary policy decision will be in close focus on Thursday, as economists broadly expect a 500 basis points increase, in keeping with the recent pivot to orthodox policy.

The lira TRYTOM=D3 traded 28.1 to the dollar ahead of the verdict due at 1100 GMT.

“It’s clear that authorities are weighing in the trade off between some legacy issues from the previous economic machine, in terms of the banking sector, and pressures (on) the lira from the rise in U.S. yields, which means that the relative interest rate differential is moving against them,” said Jakob Ekholdt Christensen, senior EM strategist at BankInvest.

Market participants are also keeping a close eye on the Israel-Hamas conflict, and the repercussions a widening strife could have on oil supply from the region, a key resource for developing markets. O/R

In central and eastern Europe, Poland’s zloty EURPLN= was little changed against the euro after rate-setter Joanna Tyrowicz said domestic inflation will be higher in November and December, adding that she still hopes a majority can be found to support more restrictive monetary policy.

Hungary’s forint EURHUF= recovered 0.4% following two straight sessions of losses.

Meanwhile, South Africa’s rand ZAR= inched 0.2% lower ahead of September producers inflation (PPI) data, where economists expect it to rise to 4.7%.

The country’s top index .JTOPI fell 1.0%, overshadowing a 6.1% surge in Clicks Group CLSJ.J after the pharmacy chain reported a jump in annual earnings.

Elsewhere, Zambia’s international dollar bonds rose as much as 2.5 cents, as per Marketaxes, after the finance ministry said it had reached an in-principle agreement on debt restructuring terms with a creditor group holding the bonds.

(Reporting by Johann M Cherian in Bengaluru; Editing by Varun H K)