EMERGING MARKETS-Asia stocks guarded ahead of key central bank meetings, Fed rate cut

By Sameer Manekar

Sept 15 (Reuters) - Emerging Asia equities were off to a measured start on Monday, while Indonesia stocks gained for a fourth session, as investors positioned for a pivotal week of central bank meetings that many expect will see the U.S. Federal Reserve's return to rate cuts.

The MSCI gauge of emerging market equities in Asia .MIMS00000PUS was anchored around a July 2021 peak. Stocks in China .SSEC and South Korea .KS11, which make up just over half of the index, edged higher.

Investors will be keenly watching a busy slate of central bank meetings this week, including in the United States, Japan, Taiwan, and Indonesia, as well as in developed economies such as England, Canada, and Norway.

"The upcoming Fed policy meeting is undoubtedly one of the most important ones in recent times and can have a bearing on the market outlook," said Vasu Menon, managing director, investment strategy at OCBC in Singapore.

"With an abundance of liquidity on the sidelines and in the absence of a recession, Fed rate cuts could prove to be a tailwind for markets as history has often shown."

Lower U.S. interest rates are beneficial to emerging market assets as a weaker dollar eases external financing pressures, supports their currencies, and attracts capital flows into their higher-yielding bonds and equities.

Indonesia's benchmark index .JKSE advanced 0.8% to a one-week high, recovering most of its losses from earlier last week when the sudden departure of Indonesia's reputed finance minister drove foreign investors out of its equities.

The rupiah IDR= also hovered around 16,400 a dollar and government bonds rallied, with the yield on the 10-year ID10YT=RR at a two-week low of 6.321%.

Markets widely expect Bank Indonesia to hold its key interest rate at 5.00% on Wednesday after two back-to-back cuts, primarily to avoid any volatility in the rupiah in the wake of shocks from recent protests and the unexpected cabinet reshuffle.

"With the USD-IDR pair currently buoyant above 16,400, BI is unlikely to add fuel to the fire by proceeding with another cut, even as it is still looking for room to ease," said Vishnu Varathan, Mizuho's head of macro research for Asia ex-Japan.

Taiwan's equity benchmark index .TWII slipped 0.3% after scaling record peaks most of last week, and its dollar TWD=TP ticked lower to 30.287 per U.S. dollar.

Analysts also expect Taiwan's central bank to stand pat on its key rate on Thursday.

Singapore's FTSE Straits Times .STI hovered around its record high, while stocks in Manila .PSI fell 1% to their lowest since mid-April, dragged by financials and real estate firms.

Markets in Malaysia .KLSE, MYR= and Japan .N225 were closed for a public holiday.

HIGHLIGHTS:
** China's economy slumps in August as consumer, export demand sags
** Singapore banks slip; DBS Group DBSM.SI down 0.4%
** Indonesia's Bank Central Asia BBCA.JK and Bank Mandiri BMRI.JK up 1%