EMERGING MARKETS-Sino-US trade tensions weigh on Asian currencies, stocks

By Himanshi Akhand

June 3 (Reuters) - Emerging Asian currencies weakened on Tuesday, while regional stock markets showed varied performances, as renewed U.S.-China trade tensions weighed on risk sentiment.

The MSCI index of emerging market currencies .MIEM00000CUS inched 0.1% lower.

The Indonesian rupiah IDR=, the Singapore dollar SGD= and the Thai baht THB=TH weakened between 0.2% and 0.4%.

The dollar index =USD, which measures the currency against six major peers, was up 0.2% after having touched a six-week low earlier in the session.

U.S. President Donald Trump and Chinese leader Xi Jinping are likely to speak this week, just days after Trump accused China of violating an agreement to roll back tariffs and trade restrictions. China has dismissed the accusations as "groundless".

China is a major trading partner for many Southeast Asian countries and the performance of their currencies going forward will be influenced by how the U.S.-China relationship plays out, said Michael Wan, senior currency analyst at MUFG.

"The mood is cautious as it is still quite an uncertain period. A lot will depend on whether we get some sort of a toning down in terms of tariff escalation rhetoric between the U.S. and China," he said.

Also weighing on risk sentiment was the 50% U.S. tariff on imported steel and aluminum set to take effect on Wednesday, coinciding with the Trump administration's deadline for countries to submit their best trade negotiation offers.

Stock markets across the region delivered mixed performances, with shares in Malaysia .KLSE and India .NSEI down 0.3% and 0.2%, respectively, while those in the Philippines .PSI added 0.5%.

Equities in Taiwan .TWII were up 0.8%, with TSMC 2330.TW rising 1.2%. The chip giant said U.S. tariffs are having some impact on the company but demand for artificial intelligence remains strong and continues to outpace supply.

Markets in South Korea were closed as the country elects a new president on Tuesday, concluding six months of turmoil triggered by a shock martial law briefly imposed by former leader Yoon Suk Yeol.

The won KRW=KFTC has strengthened nearly 7% so far this year and was last quoted at 1,377.1 per dollar.

Maybank analysts said the currency should continue to trade around the current levels if there is no surprise in the elections.

"The political risk premium has eased considerably since the days of martial law and should continue to do so, although uncertainty from Trump trade policy and specifically planned semiconductor tariffs could continue to weigh on the KRW," they said.

HIGHLIGHTS:

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