* EM stocks down 1.4%, FX down 0.5%

* Romania approves 2026 budget plan with 6.2% deficit

target

* Polish president vetoes EU defence loan bill

By Pranav Kashyap

March 13 (Reuters) - Emerging market assets are on track

to log a second consecutive week of losses on Friday, as

investors continued to flee riskier bets, with no clear end in

sight to the Iran war.

The MSCI index for emerging market equities fell 1.4%

on the day, taking the weekly loss to nearly 2%. A similar index

tracking emerging market currencies slipped

0.5%, setting it up for a weekly decline of about 0.6%.

Equities in Mumbai and Istanbul each

dropped more than 1%, while Seoul slid 1.7% and Bangkok

lost 1.5%.

U.S. President Donald Trump lashed out at Iran's

leadership, calling them "deranged scumbags" and saying it was

his "great honor" to kill them, as the conflict in the region

neared the two-week mark amid sustained barrages of drone and

missile strikes.

In Tel Aviv, stocks were on course for their worst

week since October 2023. Markets in Dubai and Doha

were also under heavy strain, with both set to post a

fourth consecutive week of losses as the regional fallout

intensified.

Governments around the world have spent the week scrambling

to cushion the shock from violent swings in energy prices. New

Delhi invoked emergency measures to tackle supply shortages,

Poland turned to financial tools to blunt the impact, and Brazil

removed taxes on diesel while imposing levies on oil

exports.

In central and eastern Europe, Romania's leu was

flat, while the country's benchmark equity index fell

0.3%. The government approved a 2026 budget targeting a deficit

equal to 6.2% of economic output - a figure still well above the

European Union's fiscal ceiling of 3% of GDP.

Turkish equities, which began the year on a strong

footing, have since drifted into slight declines. The shift in

momentum comes as recent inflation data points to a loss of

steam in the disinflation trend, with higher energy costs

further clouding the outlook.

The country, Iran's neighbour, is now expected to see consumer

inflation reach around 25% by year-end. That came a day after

Turkey's central bank paused its easing cycle once again, citing

market turbulence from the conflict. S&P Global Ratings also

said the Iran-driven spike in oil prices would be a negative for

the country.

"Inflation fears are prevailing and yields are climbing, but

we think the latter will only increase by a small amount if

equity investors start to seek safe havens. Above all, we view

all these effects as temporary," said Joost van Leenders, senior

investment strategist at Van Lanschot Kempen.

Later in the day, the rating agency was also expected to

review Saudi Arabia's A+ credit rating with a stable outlook.

Elsewhere, the Polish zloty edged slightly higher,

though stocks fell 1% as markets absorbed news that the

country's president had declined to sign legislation

establishing a mechanism to deploy 43.7 billion euros ($50.04

billion) in European Union loans aimed at strengthening the

military.

($1 = 0.8733 euros)