EMERGING MARKETS-Southeast Asian stocks, currencies gain in first reaction to Sino-US trade deal

Updates for afternoon trade

By Roushni Nair

May 13 (Reuters) - Southeast Asian equity markets gained on Tuesday, while regional currencies benefited from a faltering U.S. dollar, in their first reaction to the U.S.-China trade deal, although there was the overhang of caution that weighed on Asian markets broadly.

The financial markets in Thailand, Malaysia, Indonesia, the Philippines and Singapore were closed for the Vesak Day holiday on Monday, when global markets rallied after the United States and China struck a deal over the weekend to temporarily slash reciprocal tariffs.

Malaysian shares .KLSE surged 2.1% to their highest since March 3 on resuming trade on Tuesday, while Philippine stocks advanced 1.6% to levels unseen since January 8. Thai stocks .SETI rose 0.8%, and Singapore's benchmark .STI was up 0.5%.

A number of Southeast Asian countries are economically reliant on China.

Taiwan's benchmark .TWII mirrored the 1% gain from the previous session, though South Korean stocks .KS11 were flat, taking a breather after a more-than-1% jump on Monday.

The rally in the broader Asian stock markets also ran out of steam as resurgent worries about U.S. President Donald Trump's trade policies and their impact on the global economy kept risk sentiment in check. MKTS/GLOB

The evolving trade policies remain a significant economic risk factor, potentially driving both inflation and growth constraints for the U.S. even at the lower tariff levels, said Saktiandi Supaat, Maybank's chief FX strategist.

That also weighed on the dollar index =USD, whose rally on Monday had flipped to a 0.2% dip by Tuesday afternoon in Asia. USD/

That, though, lifted Southeast Asian currencies. The Thai baht THB=TH advanced as much as 1% to 33.135 per U.S. dollar, while the Indian rupee INR=IN added 0.4%, and the Philippine peso PHP= and Singapore dollar SGD= gained 0.2% each.

The Malaysian ringgit MYR= bucked the trend to drop 0.5%, declining for the sixth straight session. It has weakened since the country's central bank held interest rates steady on Thursday and flagged risks of slower economic growth.

Indian stocks .NSEI fell over 1% while Pakistan's benchmark .KSE surrendered most gains to edge up 0.2%.

Both markets had surged on Monday after India and Pakistan reached a ceasefire over the weekend after days of military conflict.

India is due to release inflation data later in the day. However, the focus will be on the U.S. inflation report hours later, with analysts expecting tariff-driven price increases in certain goods.

HIGHLIGHTS:

** Markets in Indonesia are closed for a holiday.

** Pakistan FM: conflict with India won't have large fiscal impact

(Reporting by Roushni Nair in Bengaluru; Editing by Rashmi Aich and Savio D'Souza)

((Roushni.Nair@thomsonreuters.com))