* Indonesia's forex reserves hit two-year low after currency

interventions

* South Korea and Taiwan indexes slump as AI rally pauses

* U.S. jobs data fuels Fed rate hike bets, strengthens

dollar

By Avinash P

June 8 (Reuters) - Emerging market stocks fell on Monday as

strong U.S. jobs data raised expectations of a rate hike by the

Federal Reserve, while fresh attacks in the Middle East pushed

up oil prices and fuelled inflation fears.

Stronger-than expected U.S. payrolls data on Friday reinforced

hawkish bets, with traders pricing in a roughly 73% chance of at

least one Fed rate hike by the end of the year, according to

data compiled by LSEG.

MSCI's global EM stock index fell 3.6% and was

poised for its worst intraday showing in three months. The

currencies gauge eased 0.1% against a stronger

U.S. dollar.

"The bulk of the sell-off on Friday happened when Asian

markets were closed. So Asian markets are now playing catch up

today," said Kathleen Brooks, research director at XTB.

Tech-heavy bourses in South Korea and Taiwan

slumped 8.3% and 3.5%, respectively, and were on track for their

biggest daily drop in three months, as the rally in AI stocks

paused, tracking losses on Wall Street.

Both indexes have risen more than 50% so far this year,

powered by the AI boom, and led gains on the broader MSCI stocks

gauge.

The South Korean won rose 1.7% after hitting its

weakest level against the dollar in more than 17 years.

The country's financial authorities agreed to investigate and

take stern action against speculative trading that has fuelled

sharp swings in the currency.

Indonesia's rupiah extended its slump, hitting a fresh

low. Local stocks were down 4.5%.

The nation's forex reserves dropped by $1.3 billion in May to

$144.9 billion, their lowest in nearly two years, following its

interventions in the currency market, Bank Indonesia said.

In the Middle East, Israel said it hit a petrochemical plant in

Iran's southwest, and other military targets, the first such

strikes since a ceasefire came into effect two months ago.

Oil prices jumped 4.8% as the latest flare-up threatened to

complicate efforts to secure a wider peace deal in the region.

Chinese stocks hit their lowest in two

months, while India's benchmarks were down

0.9%.

India's inflation likely rose to the Reserve Bank of India's

medium-term target of 4% in May, driven by higher fuel costs and

vegetable prices, a Reuters poll showed.

Elevated oil prices have stoked inflation fears globally and

can be a bigger drag on energy-importing economies in emerging

markets.

Several dollar-denominated bonds in Sri Lanka and Egypt were

down more than 1 cent each.

Equities in Turkey dipped 0.1%, while South

Africa's fell 0.8%. The Turkish lira and

rand were flat.

Most emerging European currencies were flat against the

euro, while stock indexes were down.

Polish equities fell 1.1%, Romania was down

0.8% and Hungarian stocks eased 0.4%.

Elsewhere, Armenia's ruling Civil Contract party won just under

half of the votes in a parliamentary election seen as a test of

its handling of a peace deal with Azerbaijan and its growing

pivot to the West, away from traditional patron Russia.

HIGHLIGHTS:

** South Korea flags new big investment project as tax revenue

swells on AI boom

** Indonesia central bank, finance minister agree to boost asset

yields to aid rupiah

** Brazil to announce first panda bond issuance during China

visit in June, say sources

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