EMERGING MARKETS-EM equities slide as Middle East war escalates, oil surges

By Twesha Dikshit

March 19 (Reuters) - Emerging market equities and currencies tumbled on Thursday as the escalating conflict in the Middle East threatened energy infrastructure and spooked investors, while markets also awaited several central bank decisions.

Iran reacted to an attack on its vast South Pars gas field on Wednesday by threatening oil and gas infrastructure across the Gulf and firing missiles at Qatar and Saudi Arabia, sending Brent crude to more than $115 a barrel.

U.S. President Donald Trump said an angry Israel had attacked the Iranian gas field, but would not make any such further moves unless Iran retaliated.

"EM assets remain under pressure as the war in Iran continues, although the nature of that pressure has evolved in subtle and important ways underneath the headline level," said analysts at Goldman Sachs.

"As the conflict has extended, fundamental factors such as terms of trade and earnings sensitivities have started to play a larger role. We expect to see that type of differentiation persist and extend in the days ahead."

The MSCI EM equities index .MSCIEF dropped 2.8%, while a corresponding currencies gauge .MIEM00000CUS was down 0.6%.

CENTRAL BANKS OUTLOOK AWAITED

Markets have also turned their attention to monetary policy in a week packed with central bank meetings.

While the U.S. Federal Reserve and the Bank of Canada held rates steady on Wednesday, their leaders signalled they are on alert, wary that rising energy prices could spark a fresh wave of inflation.

Taiwan's central bank also left rates steady as widely expected and increased its inflation forecast, but raised its growth outlook for the year on booming tech exports.

Investors now await policy decisions from the Czech Republic and Ukraine scheduled for later in the day.

Stocks in the Czech Republic .PX slipped 0.7%, while the crown EURCZK= was flat. Most regional indexes were lower, with those in Poland .WIG20 and Greece .ATG falling 1.3% and 1.9%, respectively.

Official data in Poland showed that producer prices fell less than expected in February from a year earlier, while wages rose below economists' forecasts.

Finance Minister Andrzej Domanski said geopolitics was expected to have a limited impact on inflation in Poland, despite a rise in energy prices.

Bourses in the Middle East were mixed, with those in Egypt .EGX30 and Oman .MSX30 gaining 3.4% and 1.3%, respectively. Qatar's index .QSI fell 1%.

Documents showed that Gulf states requested an urgent debate at the United Nations Human Rights Council in Geneva over Iran's strikes on civilians and energy infrastructure across the Middle East.

The Hungarian forint EURHUF= was 0.5% weaker against the euro, while the Polish zloty EURPLN= also ticked lower. The Turkish lira TRY= lost 0.3% against the dollar.

Shares in South Africa .JTOPI, a major gold and platinum exporter, slumped 4.4% tracking bullion prices.

Asian markets, most of which are vulnerable to energy shocks as importers, came under renewed pressure after partially recovering this week.

Benchmark indexes in South Korea .KS11, Taiwan .TWII and Hong Kong .HSI were down between 1.9% and 2.7%. India's Nifty 50 .NSEI and Sensex .BSESN were down 3% each.

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