* Philippine peso set for worst week since August
* Indonesian rupiah set for second week of losses
* Manila stocks lead gains in the region

By Echha Jain
       Jan 12 (Reuters) - Asian emerging markets currencies
languished on Friday as higher-than-expected inflation in the
United States failed to deter March interest rate cut bets,
keeping the greenback steady, with most currencies on track to
end the week lower.
    The Philippine peso edged 0.1% higher on Friday, but
logged a 0.7% decline over the week, set for its biggest weekly
loss since late August last year. The Indonesian rupiah,
on the other hand, slipped marginally and was on track for a
second consecutive week of losses.
    Equities in Manila and Thailand were the
biggest gainers in the region for the day, jumping 0.8% and 0.3%
respectively.
    Overnight, data from the United States showed consumer
prices rose more than expected in December, suggesting the Fed
may need to maintain high interest rates for a longer period,
however the market continues to expect a rate cut soon,
according to CME FedWatch tool.
    The tool showed a 73% chance of a rate cut in March as of
0422 GMT, compared to a near 66% chance at the beginning of the
week.
    Robert Carnell, head of research and chief economist
Asia-Pacific at ING, said "the market pricing simply looks
wrong."
    "Without some sort of crisis somewhere – say a new banking
collapse or some massive blow out of commercial real estate
credit - I can't see how the Fed can possible justify a cut by
March," Carnell said. 
    Analysts at Bank of America however maintained their view of
a quarter-point rate cut in March, writing that a soft core
personal consumption expenditure (PCE) index increases the
likelihood of the first rate cut in March. 
    Separately, the U.S. and Britain launched strikes against
Houthi military targets in Yemen after the Iran-backed group
attacked international ships in the Red Sea, leading to a surge
in oil prices and likely dampening investor sentiment.
    Meanwhile, data from China showed consumer prices extended
their decline for a third month in December, while factory-gate
prices also fell, highlighting the persistence of deflationary
forces in the world's second-largest economy. 
    Carnell added that China's CPI data came in negative due to
a "very unhelpful" comparison with food prices last year,
coupled with some weakness in current gasoline prices which
"reflects an economy that is weak, but not one that is in a
deflationary doom-loop."
    The Chinese yuan and stocks in Shanghai
were little changed on Friday. 
    Markets in Taiwan were barely changed ahead
of a pivotal presidential and parliamentary election on
Saturday, which is being closely watched internationally amid
geopolitical tensions with China. 
    "Markets will likely focus on the extent of victory of the
new President, the degree of power sharing needed in the
Legislative Yuan between different parties, coupled with
comments from the new President especially on China relations,"
MUFG wrote. 
    Back in Southeast Asia, the Thai baht has slipped
about 1% so far this week, on track to record a second
consecutive week of losses. Bangkok stocks also fell
about 1% for the week, snapping a five-week winning streak.
    
    HIGHLIGHTS:    
    ** Malaysia says Singapore pledges $603 mln in foreign
direct investment
    ** Ralph Recto appointed Philippine's new finance minister
    ** Indonesia presidential hopeful Anies to revise 'Omnibus
Law' if elected
    
 Asia stock indexes and                               
 currencies at 0344 GMT                          
 COUNTRY  FX RIC        FX     FX  INDE  STOCKS  STOCK
                     DAILY  YTD %     X   DAILY  S YTD
                         %                    %      %
 Japan               +0.28  -2.63  <.N2   1.06   5.85
                                   25>           
 China                           EC>           
 India               -0.06  +0.15  <.NS    0.00  -0.39
                                   EI>           
 Indones             -0.08  -1.05  <.JK    0.27  -0.46
 ia                                SE>           
 Malaysi             +0.06  -1.10  <.KL   -0.02   1.93
 a                                 SE>           
 Philipp             +0.14  -1.11  <.PS    0.78   3.34
 ines                              I>            
 S.Korea                         11>           
 Singapo             +0.08  -0.80  <.ST   -0.34  -1.54
 re                                I>            
 Taiwan              -0.06  -1.24  <.TW    0.06  -2.09
                                   II>           
 Thailan             +0.03  -2.52  <.SE    0.34  -0.20
 d                                 TI>           
    

    
 (Reporting by Echha Jain in Bengaluru; Editing by Sonali Paul)