* European, Asian equity markets in red, Wall Street seen lower
* China's yuan sees longest slide in decade
* Russian rouble falls 2 pct; c.bank holds rates steady
* Oil slides to new 7-year low as IEA warns of glut
* Dollar on track for losing week as long positions cut (Updates throughout)
By Dhara Ranasinghe
LONDON, Dec 11 (Reuters) - World stocks were on the brink of a two-month low on Friday, as beaten-down oil prices, a slide in China's yuan to 4-1/2 year lows and turbulence in emerging markets created a sombre mood.
Renewed volatility in oil markets and worries about China, the world's biggest commodities consumer, have pressured many markets ahead of a widely anticipated interest rate hike by the U.S. Federal Reserve next week.
The MSCI world equity index .MIWD00000PUS , which tracks shares in 45 countries, fell for a fifth straight day as emerging markets tumbled again and European shares .FTEU3 hit a two-month low. U.S. stock futures ESC1 1YMC1 pointed to losses on Wall Street.
The euro was a touch firmer against the dollar EUR= after pulling back from a rise above $1.10 earlier this week.
But the most striking currency moves came from emerging markets. South African's rand ZAR=D3 hit a new record low following this week's dismissal of the finance minister and Russia's rouble RUB= slumped 2 percent on weak oil prices, holding lower after the country's central bank left rates steady. ID:nL8N1401RP
"Emerging markets are looking shaky - there are a whole number of things going on and number one is weakness in oil prices which is clearly hurting commodity exporters' currencies," said Investec chief economist Philip Shaw.
"Everyone is also looking toward the Fed next week and there's a tug of war between an aversion to higher interest rates in the U.S. and getting closure," he said.
U.S. retail sales, inflation and consumer sentiment data due between 1330 GMT and 1500 GMT could cement expectations that the Fed is gearing up to hike rates for the first time in a decade at its Dec. 15-16 meeting.
Fed fund futures place an 85 percent chance of the Fed raising rates next week.
YUAN GOING DOWN
China's yuan fell to 4-1/2 year low at 6.4564 per dollar CNY=CFXS and posted its longest weekly losing streak in a decade, raising questions about how far Beijing intends to let the currency depreciate.
China's economic growth is within a reasonable range but the economy still faces challenges, Premier Li Keqiang said on Friday.
European shares .FTEU3 .STOXX50E fell 1.5 percent, declining for a fourth straight session, while MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS hit a two-month low and posted a weekly loss of just over 3 percent.
Emerging market stocks .MSCIEF were down for an eighth day running and on course for their worst week since September, while Chinese shares closed lower .CSI300 ahead of a spate of economic data scheduled to be released on Saturday.
"We are in risk-off mode," said Piotr Matys, emerging market currency strategist at Rabobank in London.
"Another round of selling in commodities with oil prices at new lows has sent global stocks lower and emerging market commodity currencies are under pressure."
NO RESPITE FOR OIL
Crude oil prices hit fresh seven-year lows as the International Energy Agency (IEA) warned global oversupply could worsen in the new year. ID:nL8N1400YJ
Brent slipped below $39 per barrel LCOc1 for the first time since December 2008, while West Texas Intermediate (WTI) U.S. crude futures CLc1 fell to $36.12, their lowest since February 2009.
The sharp fall in oil prices since OPEC said last week it would keep production high has fuelled expectations for lower inflation, helping push down European government bond yields.
German bond yields were set to record their biggest weekly fall in four weeks as weak oil prices helped boost expectations that low inflation may lead to further easing from the European Central Bank. DE10YT=TWEB
Elsewhere, the dollar index .DXY , which tracks the U.S. currency against a basket of six major rivals, edged down slightly. It was on track for a weekly loss of about 0.6 percent after investors trimmed dollar-long positions before the Fed meeting. (Editing by Toby Chopra)