EMERGING MARKETS-Asian assets sold off after hotter-than-expected US inflation

(.) * South Korean won, Taiwan dollar lost most in Asian FX * Asian bond yields track U.S. peers * Markets in India, Indonesia and Malaysia closed By Archishma Iyer April 11 (Reuters) - Investors exited risk-prone emerging Asian assets on Thursday, with the South Korean won and Taiwan dollar suffering the most, after a hotter-than-expected U.S. inflation reading forced them to reconsider bets on when the Federal Reserve would cut rates. U.S. consumer prices increased more than expected in March, leading investors to think a Fed rate cut would be more likely to come in September than in June. Meeting minutes from the Fed did not help risk sentiment either, showing that officials were wary about progress on inflation even before the March CPI data. That resulted in spikes to the dollar index and benchmark 10-year yields, with the former jumping around 1% overnight to 105.30, its highest in nearly five months. The dollar index was trading at 105.15 as of 0405 GMT. Traders are now pricing in less than a 20% chance for a rate cut in June, sharply down from more than 60% last week, the CME FedWatch tool showed. Among Asian currencies, the South Korean won and Taiwan dollar slipped 0.7% and 0.5% respectively, while the Thai baht and Singapore dollar traded flat. The Singapore and South Korea central banks are expected to keep their respective policy stances unchanged on Friday. Both the Thailand and Philippine central banks held their rates steady this week. "The 'risk off' function, with unwinding pivot bets accentuating the USD and UST yield spike, is too much of a headwind for EM Asia markets to shrug off," Vishnu Varathan, chief economist for Asia ex-Japan at Mizuho Bank, said in a research note. "That adage 'don't fight the Fed' will probably be conveyed as 'fret the Fed' ... with the drag on EM Asia currencies, equities, and higher bond yields to show for it," he said. Asian bond yields tracked the sell-off from their U.S. peers, with the 10-year Singapore bond yield jumping to its highest since late October and the 10-year South Korean bond yield advancing to reach a four-month peak. Stocks in Manila, Singapore, Bangkok and Taipei fell between 0.3% and 0.7%. Seoul shares were flat after falling earlier, a day after the country's liberal opposition parties scored a landslide win in the legislative elections. Separately, the Chinese yuan was trading at 7.236, after the country's central bank boosted support for the currency due to a surge in the dollar. Markets in India, Indonesia and Malaysia were closed due to public holidays. HIGHLIGHTS: ** Philippines posts $3.65 billion trade deficit in February, narrowest in five months ** Japan says it won't rule out any FX action as yen hits 34-year low ** Vietnam orders Netflix to stop advertising, distributing its games Asia stock indexes and currencies at 0405 GMT COUNTRY FX RIC FX FX YTD INDEX STOCKS STOCKS DAILY % DAILY % YTD % % Japan +0.16 -7.76 -0.44 17.78 China -0.02 -1.91 0.37 2.14 India - +0.03 - 4.70 Indonesia - -2.81 - 0.19 Malaysia - -3.27 - 6.80 Philippines +0.09 -1.95 -0.78 3.69 S.Korea -0.70 -5.61 0.19 2.07 Singapore +0.08 -2.48 -0.35 -0.44 Taiwan -0.53 -4.53 -0.39 15.35 Thailand +0.10 -6.60 -0.44 -0.98 (Reporting by Archishma Iyer in Bengaluru; Editing by Tom Hogue)