EMERGING MARKETS-FX, stocks lower after US attacks on Iran boost uncertainty, oil supply risks

By Purvi Agarwal

June 23 (Reuters) - Emerging market stocks and currencies were trading near a two-week low on Monday, after U.S. attacks on Iran intensified geopolitical uncertainty and dampened risk appetite.

The U.S. attacked nuclear sites in Iran over the weekend, drawing retaliatory threats from Iran.

Stock markets across the Middle East were mixed, with Israeli stocks .TA125 down 0.7%, still hovering around record highs. The index was set to snap a six-session winning streak.

Stocks in Turkey .XU100 lost 0.6%, while in Saudi Arabia .TASI, they were were 1% higher.

International bonds in Israel were slightly higher to the dollar, while ones in Saudi Arabia were marginally lower.

Turkey's lira TRYTOM=D3 was at its lowest since March 19, set for its third session of declines. Israel's shekel IRS= strengthened 0.4%.

Investors looked to dump risk assets amid the elevated uncertainty and favoured the U.S. dollar =USD, which was up 0.3%, pressuring most emerging market currencies.

A report said Iran's parliament had approved closing the Strait of Hormuz, an important corridor for oil transportation, but the closure awaits approval from the top security body.

"Closing the Strait is the last option that Iran would resort to as it would certainly provoke a strong US military response, and also because its domestic economy relies on it," said Minna Kuusisto, chief analyst at Danske Bank.

Investors have been worried about the impact of a potential Hormuz closure on oil prices, which soared to a five-month high on Monday, and its impact on inflation. O/R

Analysts at Sydbank estimated that a closure of the Strait of Hormuz would be the biggest shock to energy markets in more than 50 years and would significantly increase the headwinds in the financial markets.

In emerging Europe, most currencies were lower against the euro. The Hungarian forint EURHUF= and the Polish zloty EURPLN= were down 0.3% each.

Regional bourses also slipped, in line with global stocks, with those in Poland .WIG20 and Romania .BETI losing 0.9% and 0.7% respectively.

South Africa's rand ZAR= depreciated 0.3% against the greenback, while stocks .JTOPI gained 0.5%. Tech firm Naspers NPNJn.J contributed with a 2.5% gain after posting a 59.4% jump in its full-year core headline earnings.

MSCI's index tracking global EM equities .MSCIEF was down 0.7%, as heavyweight Asian stocks lost ground, while the currencies index .MIEM00000CUS was down 0.4%.

Elsewhere, Thailand's baht TBH=TH was down about 0.8%. Prime Minister Paetongtarn Shinawatra said on Sunday that all coalition partners had pledged support for her government, days after facing calls to step down.

HIGHLIGHTS:

** India's business activity surges in June on strong demand, record export orders, PMI shows

** Indonesia c.bank to continue interventions in FX markets to ensure rupiah reflect fundamentals, official says

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