Asian stocks rally as US-China extend tariff truce; investors eye US CPI

• Indonesia stocks jump 2% to highest level since Oct. 2024
• U.S., China extend tariff truce to November
• Thailand central bank policy decision due on Wednesday

By Roshan Thomas

Aug 12 (Reuters) - Asian stocks climbed and currencies mostly steadied on Tuesday after the U.S. and China extended their tariff truce to November, tamping down market jitters ahead of a closely watched U.S. inflation reading due later in the day.

Equities in Indonesia .JKSE rose as much as 2%, with the main stock market index hitting its highest level since late-October 2024.

Jakarta reached a tariff deal with Washington in mid-July that set duties at 19% on goods from Southeast Asia's biggest economy, well below the previously threatened 32%, which has helped drive up the benchmark index.

Stocks in Malaysia .KLSE and Philippines .PSI gained 0.2% and 0.6%, respectively. Shares in Taiwan .TWII edged 0.2% higher.

"A weak dollar and U.S. trade policy uncertainties have led to increased capital inflows into emerging market equities in recent times where growth is attractive and valuations are relatively attractive," said Vivian Lin Thurston, a portfolio manager for William Blair's Emerging Markets Growth.

Lifting market sentiment across Asia, U.S. President Donald Trump signed an executive order overnight extending a 90-day pause on triple-digit tariffs on imports from China, and Beijing issued a pause on extra tariffs on imports from the U.S.

Globally, investors are keeping an eye out for the U.S. consumer inflation report for July later in the day that could shape expectations for a September Federal Reserve rate cut.

"Softer-than-expected U.S. CPI may even tip markets to price in some chance of a 50-basis point Fed cut in September," said Christopher Wong, currency strategist at OCBC.

Among Asian currencies, the Philippine peso PHP= and Indonesian rupiah IDR= shed 0.2% and 0.1% each, while most regional peers stayed flat against a steady dollar. USD/

Earlier, the dollar slipped as traders raised bets on rate easing based on Trump's dovish-leaning pick for a Fed governor and similarly inclined potential candidates for chairman.

Elsewhere, investors await July inflation data from India, after the Reserve Bank of India left interest rates unchanged last week, while also flagging risks from U.S. tariffs. The rupee INR=IN inched 0.1% higher.

Markets in Thailand were closed for a public holiday. Investors are on the lookout for the Bank of Thailand's rate decision on Wednesday, with a Reuters poll forecasting a 25-basis-point cut to 1.50%.