EMERGING MARKETS-Indonesian stocks rally as February CPI slows; Trump tariffs in focus

Updates at 0619 GMT

By Shivangi Lahiri

March 3 (Reuters) - Indonesian shares rose on Monday as the nation saw its first deflation in about 25 years in February, while most currencies in emerging Asian markets were subdued as U.S. tariffs on Canada and Mexico are set to take effect.

The Indonesian benchmark index .JKSE rose as much as 3.9% after losing 7.8% last week, while the rupiah IDR= advanced about 0.6% to 16,484 against the dollar.

The consumer price index in Southeast Asia's largest economy fell 0.09% in February from a year earlier, the first annual measure of deflation since March 2000, official data showed, after the government's substantial discount on electricity bills to support economic growth.

The rupiah has been this year's worst performer, down about 2.7% so far. Bank Indonesia (BI) made a "bold" intervention in the foreign exchange market after the currency hit a five-year low on Friday.

"What has been affecting the Indonesian markets, including the rupiah ... is coming from the uncertainty around the new sovereign wealth fund ... and corporate governance," MUFG Bank's senior currency analyst Lloyd Chan said.

"We have seen global funds pulling out of Indonesian equities over the past several weeks."

President Prabowo Subianto launched a $20-billion Danantara Indonesia fund on February 24 to help drive development and fulfil his promise of boosting economic growth to 8%.

However, some obscurity around the certainty of the funds and investment mandates have left investors jittery.

Other emerging Asian currencies rose slightly, as markets braced for U.S. President Donald Trump's tariffs on Mexico and Canada set to take effect from Tuesday.

The Philippine peso PHP= and the Singapore dollar SGD= were up 0.1%, each, while the Indian rupee INR=IN gained 0.2%.

"What is concerning to the central banks (across emerging Asia) is the scope and size of the tariff that is going to come," Chan said.

The year's second half could afford Asian central banks more room to lower interest rates, particularly as the negative impacts of tariffs are felt.

Emerging Asian stocks were up, however, ahead of the tariff decision, with Singaporean stocks .STI rising 0.5% and the Philippine shares .PSI advancing 1.3%.

Taiwan was an outlier, with its dollar currency TWD=TP down about 0.4%, while stocks .TWII dipped 1.3%, dragged down the most by TSMC 2330.TW, which fell as much as 3.9%.

Inflation data is awaited this week in the Philippines, Taiwan and Thailand.

Malaysia's central bank is expected to hold key rates at 3% on Thursday, Chan added.

HIGHLIGHTS:

Philippines President Marcos ready to meet Trump immediately, ambassador to Washington says

Markets in South Korea closed on holiday