EMERGING MARKETS-Asian equities, FX firm as optimism seeps in over US-Iran talks

By Rajasik Mukherjee

April 14 (Reuters) - Most emerging Asian stocks and currencies firmed on Tuesday as reports of further U.S.–Iran talks improved risk appetite, while Singapore's central bank tightened its monetary policy settings and warned of war-driven inflation risks.

Sources told Reuters that the United States and Iran have kept the door open to dialogue after the collapse of peace talks over the weekend, helping boost global risk sentiment and lifting markets worldwide.

The MSCI EM Asia equities index .MIMS00000PUS and a broader gauge of global EM equities .MSCIEF advanced about 2% each, hitting their highest in six weeks, with a subset of ASEAN stocks .MISU00000PUS also touching an early-March peak.

South Korea's tech-dominated KOSPI index .KS11 rose as much as 3.8%, hitting its highest since March 3, while Taiwan's stock index .TWII hit a record high of 36,322.71.

"The markets really want to give peace a chance, accentuating the positives and downplaying the negatives as tensions between the U.S. and Iran simmer away," said Kyle Rodda, a senior financial market analyst at Capital.com.

"Despite this, the risk for further volatility remains high, with headline risk continuing to drive the action. In addition to that, global energy markets remain under strain."

Focus remains on the impact on oil flows and any broader fallout from the U.S. blockade of Iranian shipping in the Strait of Hormuz, even as diplomatic efforts remain underway to resolve the conflict.

In Singapore, the central bank tightened its monetary policy settings and flagged the risk that an Iran war-fuelled energy shock could push up core inflation.

Stocks in the city-state .STI rose as much as 0.6%, while its dollar SGD= was largely unfazed by the monetary tightening.

Stocks in Jakarta .JKSE surged 2.3% to hit their highest since March 6, with Chandra Asri TPIA.JK - Indonesia's leading petrochemical firm - rising 3.5%.

However, the rupiah IDR= sank to a lifetime low of 17,140 per U.S. dollar, as volatility in oil prices and fiscal and governance concerns keep it under pressure.

"This is a seasonally week period for rupiah, in midst of importers' dollar demand, and dividend repatriation, besides concerns over the feedthrough of higher oil on the fiscal books," said Radhika Rao, a senior economist at DBS Bank.

Among currencies, the Malaysian ringgit MYR= appreciated 0.4% to 3.9540 a dollar, its highest level since March 25.

The Philippine peso PHP= and the Taiwan dollar TWD=TP also inched higher, with the latter touching its highest since early March.

Thailand's stock market .SETI was closed for a holiday, while the baht THB=TH traded largely flat. Financial markets in India .NSEI, INR=IN were also closed for a holiday.

HIGHLIGHTS:

South Korea's Lee warns Middle East conflict to keep oil price high, orders quick aid rollout

Counting continues in Peru election, runoff with Fujimori likely

Middle East war to boost Ukraine inflation, central bank chief says