EMERGING MARKETS-Asian stocks, currencies rally as US-Iran ceasefire lifts risk appetite

By Sneha Kumar

April 8 (Reuters) - Equities and currencies in emerging Asia rallied sharply on Wednesday after a two-week ceasefire between the United States and Iran sent crude prices below $100 a barrel, lifting assets battered by oil shocks over the past few weeks.

The MSCI gauge of EM Asia equities .MIMS00000PUS surged 5% to a three-week high. A broader index of global EM equities .MSCIEF jumped 4% to a three-week high, while its currency counterpart .MIEM00000CUS advanced nearly 1%.

U.S. President Donald Trump on Tuesday agreed to a ceasefire with Iran, sending oil prices tumbling below $100 a barrel and boosting assets in oil-dependent developing economies in Asia.

"These negotiations and a pulling back from the brink are certainly positive, including for Asia, which has been and continues to be disproportionately hurt by a Strait of Hormuz closure," MUFG analysts wrote.

"Nonetheless, while the probabilities have shifted in favour of a meaningful re-opening of the Strait of Hormuz over the next two months, we are still cautious on the risks for Asian economies and FX and rates markets for a few important reasons."

Equity benchmarks in South Korea .KS11 and Taiwan .TWII, which together account for nearly half of the emerging markets-Asia gauge, jumped 7% and 4.5%, respectively.

Stocks in Singapore .STI, Indonesia .JKSE, Malaysia .KLSE, the Philippines .PSI, and Thailand .SETI also jumped between 1% and 3%.

Currencies in the region also appreciated sharply as the dollar index =USD weakened to its lowest point in four weeks.

The South Korean won KRW=KFTC appreciated roughly 2% to 1,474.2 per dollar, while Taiwan's dollar TWD=TP jumped to 31.79, both currencies at their highest point since early March.

In Southeast Asia, the Philippine peso PHP= appreciated to 59.494, its highest level in more than two weeks, while the Thai baht THB= and the Malaysian ringgit MYR= climbed about 1% each.

The Indonesian rupiah IDR= snapped its losing streak to climb sharply to 16,970 a dollar, before paring early gains to trade up around 17,010.

"The slump in oil prices and the greenback has resulted in reversal of relative values favouring oil-importer Korean won, Thai baht," Maybank analysts wrote.

"That said, the situation is overall favourable for all non-USD currencies – G10 and Asian currencies alike."

In India, the Nifty 50 index .NSEI held gains at 3.4%, and the rupee INR=IN was steady at roughly 92.5 a dollar, after the central bank kept its key policy rate unchanged as it awaits clearer evidence of the impact from the Middle East conflict.

In another development, FTSE Russell confirmed on Tuesday that it will upgrade Vietnam to "emerging market" status in September from "frontier" status based on an interim review.

Vietnam's benchmark stock index .VNI rose 3.5% on the day, but has lost 2.7% so far this year as the Iran war sapped risk sentiment.

HIGHLIGHTS:

Indonesia's forex reserves drop $3.7 billion in March

Philippine central bank warns of oil spike 'spillover effects' as inflation breaches target

Japan's Nikkei share average .N225 rises 5% to one-month high