EMERGING MARKETS-Asian currencies trim gains as U.S. inflation rally fades

(Repeats for Southeast Asia) * South Korean won falls 0.9% * Indonesia's stocks jump 1.1% * BSP expected to cut rates in August - analysts * Indonesia and South Korea rate decisions expected next week By Poonam Behura May 17 (Reuters) - Asian currencies trimmed gains on Friday after a rally sparked by softer U.S. inflation data, as market uncertainty persisted after hawkish comments from Federal Reserve officials suggested interest rates might need to stay elevated. A post-U.S. CPI rally in Asia fizzled out as the greenback rebounded following a tight labour market data and caution from central bankers about inflation. The U.S. dollar index, which had hit multi-month lows in prior session, advanced 0.2%. "While USD may adjust lower in light of recent softness in US data, there may also be a limit to how much lower the USD can go as the USD still retains a carry advantage, broadly," OCBC currency strategist Christopher Wong said. The MSCI index for emerging markets currencies edged down 0.22% after touching a two-month high on Thursday. Asian EM currencies have lost much ground against the U.S. dollar in recent years because of the Fed's hawkish policies, weaker economic data from key Asian economies, and increased global demand for the dollar as a safe haven. The South Korean won fell 0.9%, leading losses in the region. Taiwan's dollar and Indonesia's rupiah slipped 0.4% each. In the Philippines, the peso fell 0.3%, a day after the central bank stood pat on rates and hinted that it will cut rates in August. "Dovish meeting gives us more confidence that the BSP will start to loosen policy soon. We are sticking with our view that the central bank will cut interest rates by 25bps in August, with further loosening later in the year," analysts at Capital Economics said in a client note. OCBC's Wong said the window of breather for Asian currencies due to the dollar's pullback may close they may take cues from softer China data, in particular consumer spending and very weak housing. China's industrial output rose 6.7% annually in April, beating expectations, data on Friday showed. Markets are also waiting for details on China's housing as officials are expected to discuss property aid, including a proposal to buy unsold homes to ease oversupply. The yuan was trading 0.1% lower. Asian equities broadly eased due to paring back of expectations for earlier U.S. rate cuts, with markets now fully pricing in one cut in November, with 68% chance of a cut in September. Stocks in South Korea fell 1%, but stayed on course to snap a three-week gaining streak. Those in Singapore and Taiwan also slipped 0.3% each. Indonesia's benchmark index jumped 1.1%, hitting a seven-week high. The index was on course for its biggest weekly gain this year. Next week's key focus will be the central bank interest rate decisions in Indonesia and South Korea. Barclays expects policy rates for both banks to remain unchanged. First quarter GDP figures from Thailand and Singapore due next week are likely to be weaker, according to Barclays. HIGHLIGHTS: ** Singapore's April exports fall 9.3% y/y, shipments to US down sharply ** India central bank likely selling dollars to cap rupee depreciation, traders say ** Malaysia's economy grows annual 4.2% in Q1, helped by export rebound #NAME? COUNTRY FX RIC FX FX INDEX STOCKS STOCKS DAILY % YTD % DAILY YTD % % Japan -0.27 -9.46 <.N22 -0.35 16.52 5> China -0.09 -1.78 <.SSE -0.10 4.85 C> India +0.02 -0.33 <.NSE -0.05 3.04 I> Indonesi -0.38 -3.66 <.JKS 1.12 0.76 a E> Malaysia -0.04 -1.99 <.KLS 0.37 11.17 E> Philippi -0.33 -3.99 <.PSI -0.07 2.69 nes > S.Korea -0.91 -5.11 <.KS1 -0.98 2.66 1> Singapor -0.11 -2.09 <.STI -0.26 1.73 e > Taiwan -0.36 -4.66 <.TWI -0.27 18.49 I> Thailand -0.25 -5.80 <.SET 0.25 -2.45 I> (Reporting by Poonam Behura in Bengaluru. Editing by Gerry Doyle)