* Turkey's shares advance ahead of central bank rate

decision

* South Korea's KOSPI rebounds from early losses

* Hungarian forint leads Central European currencies with

nearly 7.5% yearly gain

By Avinash P

June 11 (Reuters) - Emerging market stocks were lower on

Thursday as renewed U.S.- Iran tensions pushed up oil prices and

curbed risk appetite, while currencies remained mostly muted.

The United States and Iran traded air attacks for a second

straight day, with President Donald Trump vowing further strikes

if Tehran does not immediately agree to a peace deal.

The escalation in hostilities is the biggest test yet of the

fragile truce that took effect in early April. The conflict has

driven energy prices higher, exacerbated inflationary pressures

and stifled growth expectations.

MSCI's global EM stocks index dipped 0.4%.

Taiwanese equities inched 0.2% lower while South Korea's

KOSPI ended 0.4% higher, buoyed by a 2.6% rise in

chipmaker SK Hynix.

Both indexes have seesawed this week as Middle East

uncertainty and a halt in the AI rally weighed on otherwise

exceptional yearly performances.

Currencies were largely flat to lower against the U.S.

dollar, which held firm as a rise in May U.S. consumer

inflation to a three-year high reinforced expectations that the

Federal Reserve would not lower rates.

The South Korean won depreciated 0.6%, taking the

currency's yearly loss to more than 6%, placing it among the

worst performers of 2026. MSCI's currency gauge

slipped 0.1%.

Indonesia's stock exchange was set to snap a two-day win

streak, while the rupiah firmed against the dollar.

"Portfolio outflows are weighing on the tech-sensitive

Korean won. We have not touched on the idiosyncratic sell-off in

the Indonesian rupiah recently, but Tuesday's emergency rate

hike by Bank Indonesia has failed to quell many concerns over

local policy decisions there," said ING analysts said in a note.

Bourses in India edged higher while China's

benchmark indexes traded lower.

Turkish shares advanced 0.2%, ahead of the central

bank's rate decision later in the day, while the currency

slipped.

Analysts polled by Reuters expect the central bank to hold

its benchmark interest rate at 37%.

Currencies of Central European economies were largely flat

against the Euro, but Hungary's forint strengthened

0.1%, taking its yearly gain to almost 7.5%.

Equities in Budapest and Warsaw gained 1% and

0.6%, respectively, while those in Bucharest were flat.

HIGHLIGHTS:

** South Korea expects favourable outcome after Lee's EU

steel request

** Indonesia April retail sales drop 3.7% on year in

steepest fall since May 2023

** Some lenders hike rates on FX deposits for non-resident

Indians

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