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EMERGING MARKETS-Asia FX falls as U.S. inflation fans Fed rate hike fears

    * Asia FX, equities broadly lower
    * U.S. inflation raises Fed rate hike worries

    By Shashwat Awasthi
    July 14 (Reuters) - Emerging Asian markets slipped on
Wednesday after U.S. inflation data stoked fears of
earlier-than-expected policy tightening by the Federal Reserve,
while Singapore stocks shed small, early gains made after the
release of gross domestic product data.
    Consumer prices in the United States increased by the most
in 13 years in June, leading investors to sweat over the
prospects of the Fed scaling back policy support swiftly.

    The U.S. dollar firmed after the data overnight, leading
South Korea's won down 0.4% while Indonesia rupiah
 and Malaysia's ringgit eased 0.2% each.
    "This backdrop of higher for longer U.S inflation and a
faster hiking Fed and strengthening USD is not a good recipe for
emerging Asia," Robert Carnell, regional head of research,
Asia-Pacific at ING said in a note.
    "...With the backdrop turning less supportive, we may have
to deal with a broad-based EM souring in both bond and FX space
as we head into the year-end."
    Singapore's FTSE Strait Times Index traded flat after
rising as much as 0.3% and the Singapore dollar was
unchanged.
    Preliminary data showed the economy grew its fastest pace in
just over a decade year-on-year, but contracted 2% on a
quarter-on-quarter seasonally adjusted basis.
    Alex Holmes, emerging Asia economist at Capital Economics,
said he still expects GDP to expand to the top end of the
government's 4%-6% estimate in 2021.
    "With new infections down and the government rolling back
containment measures, the recovery should regain momentum over
the coming months," Holmes said.
    Philippine shares avoided the broader fall and added
0.1% after a more than 1.7% drop on Tuesday. Data also showed
remittances in May jumped more than 13% from last year.

    Vietnamese shares also gave up early gains to trade
0.4% lower. The index has slumped more than 7% so far this month
amid a record rise in COVID-19 infections, but HSBC equity
strategist Devendra Joshi was still bullish on its prospects.
    "We believe Vietnamese equities still have juice left and so
we remain positive," Joshi said in a note to clients.
    "With the pandemic still a cause for concern and the market
dominated by retail investors, further volatility can't be ruled
out. But we do not expect the weakness to persist for long."
    
    
    HIGHLIGHTS
    ** Indonesian 3-year benchmark yields are down
5.7 basis points at 4.554%.
    ** In the Philippines, top index gainers are JG Summit
Holdings up 1.8%, Metro pacific Investments up
1.3%, and Bank of the Philippine Islands up 1.2%.
    ** Top gainers on Singapore's STI include Thai Beverage
 up 1.5%, Yangzijiang Shipbuilding Holdings
up 1.5%, and Jardine Matheson Holdings up 0.6%.
    
    
      Asia stock indexes and                      
      currencies at 0331 GMT                    
 COUNTRY   FX RIC     FX     FX    INDE  STOCK  STOCK
                    DAILY   YTD %   X      S    S YTD
                      %                  DAILY    %
                                           %    
  Japan             +0.11   -6.56  <.N2  -0.21  4.43
                                   25>          
  China   <CNY=CFX  -0.10   +0.83  <.SS  -0.95  1.71
             S>                    EC>          
  India             +0.00   -1.92  <.NS  0.00   13.09
                                   EI>          
 Indones            -0.17   -3.09  <.JK  -0.27  0.28
   ia                              SE>          
 Malaysi            -0.14   -4.22  <.KL  -0.29  -6.89
    a                              SE>          
 Philipp            -0.09   -4.20  <.PS  0.06   -4.77
  ines                              I>          
 S.Korea  <KRW=KFT  -0.42   -5.56  <.KS  -0.20  13.62
             C>                    11>          
 Singapo            +0.00   -2.52  <.ST  0.10   11.19
   re                               I>          
 Taiwan             -0.01   +1.73  <.TW  0.02   21.17
                                   II>          
 Thailan            +0.00   -8.18  <.SE  -0.19  8.19
    d                              TI>          
 
    
 (Reporting by Shashwat Awasthi; Editing by Simon Cameron-Moore)
  
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