* EM stocks up 0.75%, FX down 0.2%

* Central Europe more resilient to supply shocks - S&P

* Hungary to provide FX from reserves to cover energy

imports

By Pranav Kashyap

March 11 (Reuters) - Most emerging-market stocks

extended their rebound for a second straight day, on the back of

gains in Asia, but currencies lagged behind as investors

continued to weigh inflation risks from the Iran war.

As the conflict entered its 12th day, markets remained on

edge, with traders bracing for fresh volatility.

There were few signs that any end to the fighting may come

soon. A spokesperson for Tehran's Khatam al-Anbiya military

command headquarters on Wednesday said Iran will target economic

and banking interests linked to the U.S. and Israel in the

region, after an attack on an Iranian bank.

MSCI's emerging-market currencies index fell

0.2%, after a near 1% rise in the previous session, as investors

flocked to the dollar as a safe haven.

A key emerging-market equities gauge however

climbed 0.75%, adding to gains of 3.4% on Tuesday, helped by a

report that the International Energy Agency is recommending the

release of more than 100 million barrels in strategic crude oil

reserves for the first time.

"What we do know is that the longer crude oil trades at

elevated prices, the more significant the pain for Asia, and the

more intense the rotation may be across asset classes," said

Mark Haefele, chief investment officer at UBS Global Wealth

Management.

In Israel, Tel Aviv's benchmark index fell 1.8%, on

track for its worst week since October 2023. The shekel

weakened for a second consecutive session against the dollar.

Turkish shares edged 0.2% lower, as investors

looked ahead to Wednesday's interest-rate decision. The central

bank is expected to pause its easing cycle once again and keep

rates at 37%, as officials respond to the market aftershocks of

the U.S.-Iran conflict.

"A sustained disruption could trigger second-round

inflationary effects and central bank rate hikes," Haefele

added.

S&P noted that the central and eastern Europe region is now

better insulated from energy disruptions than in the past,

thanks to efforts to diversify energy sources after Russia's

2022 invasion of Ukraine. Those changes, it said, could help

blunt some of the economic fallout from the Middle East

conflict.

An index tracking the region's equities was

down 1.6%.

The Hungarian forint slipped 0.4% on the day after

gaining nearly 2% since Monday. Hungary's central bank said it

would provide foreign-currency liquidity from its international

reserves to meet higher demand for energy imports. Investors

also awaited minutes from the bank's February policy meeting

later in the day.

Hungary's main stock index fell 1.6%.

Elsewhere across emerging markets, Taiwan's stocks

jumped 4.1%, while South Korea's rose 1.4%.

Vietnamese stocks gained 3.1% after the government

tapped its fuel-price stabilisation fund to soften the impact of

rising energy costs. In contrast, markets in India

and South Africa fell more than 1% and by 2.4%,

respectively.