* Indonesian assets rise post the unexpected rate hike

* China's producer prices hit highest in nearly 4 years

* US CPI data due later on Wednesday

By Avinash P

June 10 (Reuters) - An index tracking emerging market stocks

fell on Wednesday, dragged down by heavyweight Asian bourses

as strikes by the United States and Iran tempered risk appetite

and clouded prospects of a quick peace deal.

Iran's Revolutionary Guards said they had carried out

missile and drone attacks on U.S. military bases in the Middle

East on Wednesday after U.S. strikes on Iranian targets around

the Strait of Hormuz. U.S. President Donald Trump said Iran had

downed a U.S. Apache helicopter near the strait on Tuesday.

The clashes mark one of the biggest flare-ups in

hostilities since a ceasefire was agreed in April.

Markets also awaited the latest U.S. inflation data, due

later on Wednesday, hoping for clues about the Federal Reserve's

policy path.

"A stronger-than-expected set of figures could echo what we

saw on Friday following the U.S. jobs data, sending bond yields

higher and stock prices lower. The moves could be just as sharp,

depending on the data," said Ipek Ozkardeskaya, senior analyst

at Swissquote Bank.

"The market is so crowded with bulls right now that even a

small fear could turn into a nightmare."

The MSCI index of EM stocks fell 2.5%, with

heavyweights South Korea and Taiwan slipping

4.5% and 3.3% respectively.

The index has traded lower in five of the last six sessions,

with a pause in the AI rally adding to the gloom. It is still up

nearly 19% for the year and has outperformed S&P 500's

7.9% rise.

Indonesia's assets, however, continued their ascent for a

second straight session, a day after an unexpected off-cycle

rate hike by Bank Indonesia to support the weakening currency

surprised markets.

Local equities added 2.7%, while the rupiah

appreciated 0.6% versus the dollar.

China's producer prices rose for a third straight month in

May to the highest since July 2022, while consumer prices stayed

elevated as energy prices stemming from the Iran war piled on

cost pressures.

The Chinese stocks benchmarks declined

0.4% and 1.1% respectively. The yuan was little

changed.

MSCI's gauge of EM currencies was off 0.2%.

Turkey's stocks fell 0.4%, while the lira

firmed against the dollar.

In emerging Europe, the Hungarian forint was

slightly lower against the euro but was hovering near four-year

highs. Other major currencies were also trading lower.

Stocks in Poland fell 1.2%, while Hungary was

down 0.7%. Romanian stocks were little changed.

Elsewhere, Ukrainian state energy firm Naftogaz said it has

reached a preliminary agreement to restructure two Eurobond

tranches worth 1.2 billion euros ($1.38 billion) due this year

and in 2028.

HIGHLIGHTS:

** Kenya central bank holds key rate, monitors impact of oil

prices on inflation

** Turkey opposition crisis deepens as rival CHP leaders hold

duelling meetings

** Iran war drags India equity mutual fund flows to one-year low

in May

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