* Country Garden makes dollar debt payments
* Hungary lifts FX borrowing target amid funding row with EU
* S. Africa's August business activity grows -PMI
* Bank of Israel holds interest rates
Sept 5 (Reuters) - Most emerging market stocks and currencies slipped on Tuesday as China's weak services activity data brought concerns over the world's second-largest economy's recovery back to the fore, while traders awaited a central bank meeting in Poland.
The MSCI EM stocks index dropped 0.9%, dragged by Chinese blue-chips and Hong Kong stocks after jumping on Monday on further measures to boost a faltering economy.
Data showed China's services activity expanded at the slowest pace in eight months in August on continued weak demand and as stimulus failed to meaningfully revive consumption.
Providing some relief to the battered property sector, Country Garden made interest payments on U.S. dollar bonds hours ahead of a grace period deadline, preventing a default for the second time in four days.
The Hang Seng Mainland Properties Index, however, lost 2.8% after Monday's 8% jump.
"The data has overshadowed relief that Country Garden has managed to make key interest payments on its debt, reducing, for now, concerns about contagion in the financial sector," said Susannah Streeter, head of money and markets at Hargreaves Lansdown, U.K.
"China appears to be taking one step forward, but two steps back, as optimism one day turns to pessimism the next."
The MSCI EM currencies gauge shed 0.4%, touching a two-week low, with Hungary's forint leading the losses in Central and East Europe with a 0.7% decline.
The Polish zloty slipped 0.1% against the euro, with the country's central bank kicking off a two-day policy meet during the day amid growing talks of an interest rate cut.
Meanwhile, Hungary's government debt agency on Monday raised its 2023 foreign currency debt issuance target by 230 billion forints ($648.78 million) amid a funding row with the European Union.
South Africa's rand fell 0.8% against the greenback as the country suffered the worst-ever power cuts, while a survey showed private sector activity grew for the first time in six months in August.
Traders also awaited South Africa's second-quarter gross domestic product data later in the day.
Russia's rouble weakened to 97.64-per-dollar, likely hurt by expectations that foreign currency supply would dwindle after monthly tax payments completed at August-end.
On the data front, Russia's August services sector activity grew at the fastest rate in five months.
Elsewhere, the Bank of Israel left interest rates unchanged on Monday citing easing inflation, but its decision was overshadowed by a report - denied by the central bank - that its governor was set to announce he would not seek a second term.
The shekel slipped 0.3% in early trading after gaining 0.4% on Monday.
(Reporting by Ankika Biswas in Bengaluru)
