EMERGING MARKETS-Asian FX mixed; stocks fall as China manufacturing activity disappoints

* South Korea, Thailand shares down over 1% * China's official PMI slips into contraction territory * Markets await Fed rate outcome due on Nov 1 By Poonam Behura Oct 31 (Reuters) - Emerging Asian currencies were broadly mixed in cautious trading on Tuesday, while China's equity markets weakened along with other Asian markets after a survey showed manufacturing activity unexpectedly fell in the world's second largest economy. Investors were awaiting the outcome of the Federal Open Markets Committee's (FOMC) two-day monetary policy meeting on Wednesday, as it could set the tone for markets globally. Shanghai's benchmark index fell 0.4%, while the yuan currency eased 0.1%. China's official purchasing managers' index (PMI) fell to 49.5 in October from 50.2, dipping back below the 50-point level demarcating contraction from expansion and consistent with only very slow overall economic growth. "The PMI numbers suggest that the economy is still struggling despite the better-than-expected 3Q23 GDP figures reported recently," ING analysts wrote in a note. It made discouraging reading for China's Asian trading partners. An upsurge in oil prices due to the conflict in Gaza also fuelled inflationary pressures among economies in the region while adding to their import bills. Shares in South Korea fell 1.2% to hit a 10-month low, leaving it set for a third consecutive monthly decline. Equities in Manila and Jakarta fell 0.7% each. Taipei shares fell 0.7%, on track for a third monthly decline. Meanwhile, the Thai baht eased as much as 0.5% to 36.090 per dollar at 0419 GMT. Bangkok stocks were down 0.5%, and set for a second consecutive monthly decline. Turning to Wednesday's U.S. rate decision, most expectations are for the Fed funds target rate to be left unchanged at 5.25%-5.50%, but the risk of a hike was enough to keep dollar sellers at bay. "The market is not too keen to sell dollar ahead of the FOMC meeting considering that recent US Q3 GDP was strong, and consumer spending has been robust," Wei-Liang Chang, macro strategist at DBS Bank said. The dollar index, which measures the strength of greenback against six major rivals, strengthened 0.3% to 106.391. HIGHLIGHTS: ** S.Korea stock market watchdog to launch crackdown on naked short-selling ** Japan's Sept factory output rises less than expected ** South Korea Sept factory output beats forecast; chip production jumps ** Malaysia central bank to hold rates through 2024 despite weak currency ** Thai September factory output falls 6.1% y/y, more than forecast Asia stock indexes and currencies at 0346 GMT COUNTRY FX RIC FX FX INDEX STOCKS STOCKS DAILY % YTD % DAILY YTD % % Japan -0.56 -12.5 <.N22 -0.15 17.46 6 5> China -0.08 -5.70 <.SSE -0.38 -2.57 C> India -0.01 -0.65 <.NSE 0.00 5.72 I> Indonesi -0.09 -2.11 <.JKS -0.88 -2.54 a E> Malaysia -0.10 -7.66 <.KLS 0.04 -3.72 E> Philippi +0.12 -2.01 <.PSI -0.58 -9.74 nes > S.Korea +0.05 -6.35 <.KS1 -1.18 2.10 1> Singapor -0.21 -1.99 <.STI 0.04 -5.72 e > Taiwan -0.02 -5.31 <.TWI -0.43 13.74 I> Thailand -0.44 -4.09 <.SET -0.56 -16.81 I> (Reporting by Poonam Behura in Bengaluru; Editing by Simon Cameron-Moore)