(Adds Latin American markets, Sao Paulo dateline)
By Sujata Rao and Walter Brandimarte
LONDON/SAO PAULO, Aug 24 (Reuters) - Contagion from China's equity malaise spread across emerging markets on Monday, driving currencies to multi-year lows against the dollar while a benchmark equity index slumped more than 5 percent.
Concern over the world's No. 2 economy pushed Chinese mainland stocks into their biggest one-day fall since February 2007. They lost more than 8 percent and are now in the red for 2015 .
Selling escalated across emerging markets, taking MSCI's benchmark equity index to six-year lows in its biggest one-day loss since September 2011.
Regulators' futile efforts to stem the equity rout have raised doubts about Beijing's ability to deal with the crisis. Meanwhile investors fled markets such as Philippines and India, which have been relatively resilient.
"This 2015 emerging market crisis has the potential to become worse than the Asian currency crisis of 1997/98 as it is impacting global equity markets across the globe," said Bernd Berg, a strategist at Societe Generale.
Describing the day as a black Monday for Latin American currencies, Berg advised clients to short the currencies of Chile, Brazil, and Mexico.
Brazilian stocks and currency against the dollar fell to six-year and 12-year lows, respectively. Mexico's peso slumped to an all-time low while the country's IPC stock index fell to its lowest since March 2014.
The South African rand hit an all-time low, prompting the central bank to say it may act to quell volatility.
Other emerging market officials also considered whether to intervene.
In Brazil, a member of President Dilma Rousseff's economic team indicated that the government would continue to sell currency swaps and, perhaps, dollars with repurchase agreements. For now, Brazil has ruled out selling dollars from its foreign reserves.
Taiwan, on the other hand, is "aggressively evaluating" the possibility of a large government fund to buy stocks, which plunged to 3-year lows.
Russia's economy minister said the central bank should consider pausing its rate cutting cycle next month after the rouble slumped to eight-month lows.
"Policymakers in emerging markets will move in that direction (of intervention), this always happens in this environment. The question is: will they be successful?" said Maarten-Jan Bakkum, investment strategist for emerging markets at NN Investments in The Hague.
Central European currencies fell to multi-month lows but weathered the storm better than their Asian and Latin American peers as most are commodity importers and are more tied to the euro zone than to China. (Additional reporting by Gabriel Burin in Buenos Aires; Editing by Frances Kerry)