EMERGING MARKETS-Philippine peso firms after rate hike, Asian stocks fall on growth fears

By Riya Sharma

May 19 (Reuters) - The Philippine peso firmed on Thursday after its central bank raised rates for the first time in more than three years, while Asian shares tumbled on concerns around surging inflation, its impact on retail demand, and the threat of a recession.

Stocks in Manila .PSI fell 1%, while the Philippine peso PHP= edged up 0.2%. The Philippine central bank raised its benchmark interest rate by 25 basis points, as expected, to address rising inflationary pressures. nP9N2VA01P

"With the recovery in hand and price pressures surging, Bangko Sentral ng Pilipinas (BSP) finally decided to join the rate-hike club... The bigger development was the quick walk-back of pandemic support with BSP closing the provisional advance and tweaking the bond purchase window," said Nicholas Antonio Mapa, senior economist at ING.

Equities in the region also tracked weakness on Wall Street overnight as retail giant Target Corp TGT.N warning of a bigger margin hit due to rising fuel and freight costs, and Walmart Inc WMT.N flagging a similar squeeze. nL3N2XA1XU

It was the worst one-day loss for the S&P 500 and Dow Jones Industrial Average since June 2020. .N

"The focus has now shifted towards concerns about U.S. growth as the Fed tightening is well understood and well priced in," said Khoon Goh, head of Asia research at ANZ.

"The market is now concerned that the U.S. economy might be slowing a lot faster than anticipated, particularly given the negative earnings reports coming up from retail companies overnight," said Goh.

Shares in India .NSEI and Taiwan .TWII led losses for Asian markets, falling more than 2% each.

Regional currencies weakened too, even as the U.S. dollar eased. Risk sentiment remained fragile after U.S. Federal Reserve Chair Jerome Powell ratcheted up the hawkish rhetoric. nL3N2XB0CRnL2N2X9228

South Korean shares .KS11 fell more than 1% while the won KRW-KFTC lead losses among regional currencies, skidding 0.9%. nL2N2XB02J

The Indonesian rupiah IDR=, down more than 2.5% since the country announced plans in April to ban exports of palm oil, fell 0.3%. nL2N2WK0MX

Long-tenor bonds in Singapore SG10YT=RR, seen as a safe-haven bet, saw yields slip 45 basis points to 2.715%.

HIGHLIGHTS:

** In the Philippines, top index losers are SM Investments Corp SM.PS down 3.45% at 840 pesos; International Container Terminal Services Inc ICT.PS down 1.93% at 213.6 pesos

** Thailand's central bank said it has no need to raise interest rates following the Fed's hikes as domestic factors and its economic recovery will be the main issues when deciding policy nL3N2XB0Z5

Asia stock indexes and currencies at 0736 GMT
COUNTRY	FX RIC	FX DAILY %	FX YTD %	INDEX	STOCKS DAILY %	STOCKS YTD %
Japan	JPY=	+0.09	-10.16	.N225	-1.89	-8.32
China	CNY=CFXS	-0.14	-6.02	.SSEC	0.36	-14.91
India	INR=IN	-0.15	-4.34	.NSEI	-2.45	-8.71
Indonesia	IDR=	-0.31	-3.26	.JKSE	0.51	3.75
Malaysia	MYR=	-0.26	-5.47	.KLSE	-0.15	-0.95
Philippines	PHP=	+0.13	-2.65	.PSI	-1.00	-6.49
S.Korea	KRW=KFTC	-0.87	-6.96	.KS11	-1.28	-12.94
Singapore	SGD=	+0.22	-2.87	.STI	-0.58	2.65
Taiwan	TWD=TP	-0.17	-6.96	.TWII	-1.70	-12.07
Thailand	THB=TH	+0.07	-3.57	.SETI	-0.86	-3.09

(Reporting by Riya Sharma in Bengaluru; editing by Uttaresh.V)

((Riya.Sharma@thomsonreuters.com;))