* Turkish lira last at 9.72 versus dollar * Other EMFX rise against weaker dollar * EM stocks flat Oct 25 (Reuters) - Turkey’s lira sank to new lows on Monday as tensions between Ankara and the West combined with unconventional monetary policy and rising inflation, while most other emerging market currencies firmed against weaker dollar. The lira fell more than 2%, closing in on 10 to the dollar - a level it has never hit - after President Tayyip Erdogan said he had ordered the expulsion of the ambassadors of the United States and nine other Western countries for demanding the release of philanthropist Osman Kavala. Kavala has been charged with financing nationwide protests in 2013 and for involvement in a failed coup in 2016. Lira volatility gauges jumped, dollar bonds fell, local 10-year yields moved closed to three-year highs hit last week, flirting with the 20% level. Turkey’s tension with NATO allies over Kavala comes amid heightening worries about government interventions in monetary policy, taking 2021 losses for the lira to about 24%, the worst performance among emerging market peers by a significant margin. “If politicians make foreigners the bogeyman, it is easier to sell the pressures created by the weak lira as the price to be paid for political autonomy. That also means: a monetary policy U-turn seems less likely now. And that is bad news for the lira,” said Ulrich Leuchtmann, head of FX and commodity research at Commerzbank. Turkey’s state lenders Ziraat Bank, Vakifbank and Halkbank lowered their loan rates by up to 200 basis points according to the products and maturities, they said in a joint statement on Monday, following last week’s central bank policy easing. A weaker dollar helped other EM currencies, with the Chinese yuan up almost 0.1%, while the South African rand gained 0.3%. But worries about China’s latest COVID-19 outbreak kept sentiment in check as possible containment fears could further dampen slowing economic growth. Russia’s rouble was bolstered by rising oil prices, helping it move closer to four-month highs hit on Friday after the central bank delivered a more-than-expected 75 basis points interest rate hike to 7.5%. Debt-riddled China Evergrande Group fell 0.7%. Asset managers confirmed they had received the coupon payment of a bond due over the weekend. The property developer’s chairman signalled a business shift away from property towards electric vehicles, sending the EV unit 10% higher. The company also said it will resume work on more than 10 projects and complete them. MSCI’s index of EM stocks traded flat, with Asian bourses a bit mixed, while most in emerging Europe, Middle East and Africa gained. For GRAPHIC on emerging market FX performance in 2021, see tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2021, see tmsnrt.rs/2OusNdX For TOP NEWS across emerging markets For CENTRAL EUROPE market report, see For TURKISH market report, see For RUSSIAN market report, see Reporting by Susan Mathew in Bengaluru; editing by Timothy Heritage