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EMERGING MARKETS-Asian stocks upbeat but investors cautious of looming rate hikes

* Bank of Thailand meets today * Reserve Bank of India raises key repo rate by 50 basis points * Oil rally continues By Tejaswi Marthi June 8 (Reuters) - Asian stocks rose on Wednesday, tracking a rally on the Wall Street, but gains were capped by investors' fears that aggressive central bank rate hikes could lead to stagflation. Equities in Taiwan led gains among Asian markets to advance 1%, followed by a 0.5% rise in Thailand stocks. Malaysia's also traded 0.2% higher. Thailand's central bank will meet later in the day and analysts largely expect it will hold the 1-day repo rate at 0.50% to support economic recovery. Thailand's May headline inflation hit its highest level in nearly 14 years and prices are expected to continue rising, eclipsing the central bank's 1%-3% target While the Bank of Thailand (BOT) will be hard pressed to ignore this reading, it may still look to fiscal policy efforts to rein in inflation, as it faces considerable pressure to foster a full economic recovery. Currencies in the region were largely subdued, following a dip in the U.S. dollar after Target Corp warned about excess inventory and said it would cut prices, offering some relief to those who think inflation may be peaking. Both the rupiah and the baht fell 0.2% each, and the Philippine peso eased 0.1%. The Malaysian ringgit and Indian rupee bucked the trend. "The market is still digesting that the U.S. Federal Reserve is sticking to its aggressive path in a bid to tame inflation. The U.S. economy has not slowed down enough for inflation to be under control yet," said Moh Siong Sim, FX Strategist at Bank of Singapore. India's central bank, the Reserve Bank of India (RBI), raised the key repo rate by 50 basis points (bps), the second hike in as many months, to combat galloping inflation, adding that the faster pace of monetary policy normalization in advanced economies has amplified volatility in financial markets. Wednesday's increase follows a 40-bps rise in early May at an unscheduled meeting that kicked off the central bank's tightening cycle, which economists expect to be relatively short. Mounting supply constraints and prospects of demand growth from China pushed oil prices further higher, thereby weighing on the regional currencies. Meanwhile, the World Bank slashed its global growth forecast by nearly a third to 2.9% for 2022, warning that Russia's invasion of Ukraine has compounded the damage from the COVID-19 pandemic, and many countries now faced recession. HIGHLIGHTS: ** South Korea's economy grew by a seasonally adjusted 0.6% in the first quarter from three months earlier, slightly lower than 0.7% growth estimated earlier ** Indonesia to cut maximum palm oil export tax and levy to a combined $488/T -trade minister ** Indonesian 10-year benchmark yields rise to 7.075% Asia stock indexes and currencies at 0421 GMT COUNTRY FX RIC FX FX INDE STOCKS STOCKS DAILY % YTD % X DAILY YTD % % Japan -0.40 -13.5 <.N2 0.88 -2.08 5 25> China EC> India +0.04 -4.31 <.NS -0.23 -5.62 EI> Indonesi -0.15 -1.55 <.JK 0.61 9.17 a SE> Malaysia +0.06 -5.17 <.KL 0.21 -2.45 SE> Philippi -0.11 -3.59 <.PS 0.31 -4.89 nes I> S.Korea 11> Singapor -0.04 -1.84 <.ST -0.18 3.45 e I> Taiwan -0.00 -6.18 <.TW 0.97 -8.55 II> Thailand -0.23 -3.22 <.SE 0.18 -1.37 TI> (Reporting by Tejaswi Marthi in Bengaluru; Editing by Kim Coghill)