* Bank Indonesia keeps interest rate unchanged

* Indonesian stocks pare gains slightly

* Rupiah inches higher but hovers around 16,995 a dollar

(Updates post afternoon trade)

By Shivangi Lahiri

March 17 (Reuters) - Indonesian stocks pared some gains

while the rupiah edged higher on Tuesday after the country's

central bank kept its key policy rates unchanged amid

uncertainty over the impact of the Middle East war.

Stocks in Jakarta were last up 1.2% after rising as

much as 1.8% earlier in the day, while the rupiah firmed

to 16,975 per dollar, having touched an all-time low of 16,995 a

day earlier.

Bank Indonesia (BI), in a widely expected decision, held the

benchmark 7-day reverse repurchase rate at 4.75%, and said it

will issue a new policy on foreign currency transactions

applicable from April to support the currency.

Governor Perry Warjiyo said the central bank had intensified

its rupiah intervention as the Iran war had affected the

currency, adding that the BI has "erased the statement on a

potential rate cut due to the Middle East conflict".

"A period of high oil and gas prices would cause the current

account deficit to widen, a risk acknowledged by Governor

Warjiyo, and threaten further downward pressure on the rupiah,"

analysts at Capital Economics wrote.

"The fiscal backdrop compounds this vulnerability."

Elsewhere in Asia, stocks in Seoul trimmed some

gains but still closed at a two-week high, up 1.6%, helped by a

near 3% jump in Samsung Electronics ( SSNLF ) shares.

Nvidia ( NVDA ) CEO Jensen Huang said its new AI chips were

being made by Samsung, prompting analysts to predict that the

South Korean firm's loss-making foundry business could return to

profit as early as next year.

Taiwan's tech-heavy stock market, which will also

benefit from rising AI chip demand, ended 1.5% higher.

That helped the MSCI EM Asia index advance

about 1.1%.

Markets are awaiting policy decisions later this week from

the U.S. Federal Reserve, the Bank of Japan and other major G10

central banks. The Reserve Bank of Australia raised rates on

Tuesday for a second straight month to curb inflation.

Thailand stocks rose as much as 2.5% to their

highest since March 2, while stocks in Malaysia advanced

0.8%.

Currencies in emerging Asia were largely muted, with the

Malaysian ringgit gaining as much as 0.3% to hit its

highest level in two weeks.

By contrast, Thailand's baht slipped to 32.39

against the dollar, while the Philippine peso hovered

close to the key psychological level of 60 per dollar.

HIGHLIGHTS:

** Thailand seeks crude oil from Russia, says domestic

diesel prices to rise

** Taiwan says it has received no information from US on

delay of second arms sale

** Bank of Japan chief stresses need to hit 2% inflation

backed by wage gains

** China, US in communication over Trump's visit, foreign

ministry says

Asia stock

indexes and

currencies

at 0821 GMT

Japan -0.07 -1.58

-0.09 3.60

China India Indonesia +0.06 -1.80 1.15 -17.86

Malaysia +0.33 +3.60 0.80 1.79

Philippines -0.26 -1.67 0.32 -0.44

S.Korea Singapore -0.08 +0.56 1.12 5.96

Taiwan Thailand