EMERGING MARKETS-Asia stocks gain on China stimulus hopes; Fed in focus

* China reports a drop in daily COVID-19 cases * Markets brace for Fed meeting outcome By Riya Sharma March 16 (Reuters) - Emerging Asia's stocks and currencies rose on Wednesday, driven by hopes of more economic stimulus in China, with investors also focusing on Russian-Ukraine peace talks and the U.S. Federal Reserve. Equities in China surged more than 3% and the yuan inched up 0.4% in its best session in over two months, after Vice Premier Liu He indicated China plans to take measures to boost the economy and would also announce policies favourable to capital markets. Stocks in Thailand climbed nearly 1%, while those in Singapore and South Korea gained over 1%. Currencies also edged higher, with the Thai baht and South Korean won clocking a 0.4% gain each. The gains followed a relief rally on Wall Street overnight, driven by hopes of a resolution to the conflict in Ukraine. Ukrainian President Volodymyr Zelenskiy said on Wednesday peace talks with Russia were sounding more realistic but more time was needed. Moves in Asia were still cautious ahead of a closely watched meeting of the Fed later in the day. Markets have already priced in a 25 basis points rate hike and will also look for further policy cues in light of surging inflation and volatile commodity prices following Russia's invasion of Ukraine. "The bigger question is whether one should expect a carefully hawkish Fed or an aggressively hawkish Fed in tonight's meeting," Bank of Singapore currency analyst Moh Siong Sim said. "A hawkish tone is likely to keep the dollar strong against the currencies of developed markets and markets will also look out for whether the Fed keeps the door open for a 50 basis points hike further down the road," the analyst said. Regional markets also steadied on China cues, including a drop in COVID-19 cases, with shares in Indonesia last up 0.8%, after climbing nearly 1% earlier, and the rupiah up to 0.2%. Indonesia's finance minister said the economy was resilient in the face of increased volatility due to the war in Ukraine and vowed to protect people from an "extreme" rise in food prices. Bonds in the region were under pressure, having taken a beating last week when surging commodity prices raised inflation risks, with yields on high-returning Indonesian benchmark bonds rising 32 basis points to 6.766%. HIGHLIGHTS: ** Top gainers on the Singapore STI include United Overseas Bank Ltd up 3.5% and Yangzijiang Shipbuilding Holdings Ltd up 2.29% ** Top gainers on the Jakarta stock index include Victoria Investama Tbk PT up 25.48% and Tanah Laut Tbk PT up 23.42% Asia stock indexes and currencies at 0732 GMT COUNTRY FX RIC FX FX INDE STOCKS STOCKS DAILY % YTD % X DAILY YTD % % Japan -0.03 -2.74 <.N2 1.64 10.52 25> China EC> India +0.43 -2.56 <.NS 1.60 -2.44 EI> Indonesi +0.12 -0.41 <.JK 0.72 5.87 a SE> Malaysia +0.18 -0.80 <.KL 0.48 1.78 SE> Philippi +0.15 -2.37 <.PS 0.09 -1.35 nes I> S.Korea 11> Singapor +0.27 -0.94 <.ST 1.47 5.12 e I> Taiwan -0.01 -3.28 <.TW 0.09 -7.01 II> Thailand +0.39 +0.03 <.SE 1.05 0.24 TI> (Reporting by Riya Sharma; Editing by Anil D'Silva)