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EMERGING MARKETS-Asian stocks, FX inch higher as investors gauge recession risks

·3-min read

* S.Korean shares rise over 2% * Dollar falls from two-decade highs * Lower oil prices overnight take some heat off By Riya Sharma July 7 (Reuters) - Most Asian currencies and shares edged up on Thursday, as investors juggled concerns over inflation and a recession after minutes from the U.S. Federal Reserve's June meeting showed officials rallied around an outsized interest rate hike. Currencies in the region advanced against a retreating dollar, with the Singapore dollar, South Korean won and Indian rupee rising between 0.3% and 0.5%. Wall Street closed higher overnight, while oil continued to slide as investors digested new clues on the Fed's approach to rate policy and its inflation fight detailed in the minutes of the meeting. The U.S. central bank officials noted a willingness to move interest rates as high as needed to bring inflation down to the Fed's 2% target, and a need to convince the public that it was prepared to do so. "To a fair extent, risks of further demand destruction from more restrictive monetary policy flagged in Fed minutes were already mentioned by Powell as well as other Fed officials and the spook factor from a restrictive policy has likely diminished," Maybank GM Research analysts said in a note. The safe-haven dollar retreated from near a two-decade high against major peers, tracking an easing in Treasury yields while U.S. equity futures accelerated gains as investors continued to assess the economic outlook. "Indeed, fears of a recession continue to abound in markets... Some stronger U.S. data was the bright spot that may have helped equities but it's been a bit of a random walk of late, as weaker data has also recently helped equities by reining in Fed expectations," Deutsche Bank Research said in a note. Risk appetite in Asia improved with receding oil prices overnight, taking some heat off of the net energy importing region. Benchmark U.S. Treasury yields fell to five-week lows overnight, while key parts of the yield curve remained inverted, sounding recession alarm bells. Shares in South Korea rose more than 2%, rebounding from a 20-month low hit in the previous session, with Samsung among the biggest movers after reporting earnings guidance that suggested a rebound in its chip business. Indonesia's senior cabinet minister Luhut Pandjaitan said the country is discussing the possibility of cutting the palm oil export levy to help stimulate more overseas shipments. Equities in Jakarta edged up to 0.6%, while the rupiah traded flat. Thailand's central bank said it will hold a media briefing on the policy interest rate and the baht on Friday, as the local currency trades at a more than six-year low against the dollar. The baht was trading up 0.1%, shares were set for their best session in over a week, rising 0.8%. HIGHLIGHTS: ** Indonesian 10-year benchmark yields are down 2 basis points at 7.257%​​ ** Top gainers on FTSE Bursa Malaysia Kl Index include Top Glove Corporation up 6.38% and Sime Darby Plantation up 5.22% Asia stock indexes and currencies at 0713 GMT COUNTRY FX RIC FX FX INDE STOCK STOCK DAILY YTD % X S S YTD % DAILY % % Japan +0.07 -15.2 <.N2 +1.47 -7.99 8 25> China EC> India +0.30 -5.99 <.NS +0.71 -7.20 EI> Indones +0.03 -4.94 <.JK +0.16 1.14 ia SE> Malaysi -0.07 -5.92 <.KL +0.11 -9.26 a SE> Philipp -0.32 -8.93 <.PS -1.44 -10.8 ines I> 1 S.Korea 11> 1 Singapo +0.24 -3.75 <.ST +0.27 -0.38 re I> Taiwan +0.06 -7.06 <.TW +2.51 -21.3 II> 1 Thailan +0.10 -7.66 <.SE +0.73 -6.31 d TI> (Reporting by Riya Sharma in Bengaluru; Editing by Rashmi Aich)