* The Philippines and Singapore lead gains in Southeast Asia
* U.S. inflation rose more than expected in July
* Malaysia releases GDP data on Friday
By Nikhil Nainan
Aug 13 (Reuters) - Asia's emerging currency markets crept higher on Thursday against a broadly weaker U.S. dollar, while optimism among investors over an economic recovery and U.S.-China trade talks later this week pushed stock markets higher.
U.S. inflation data on Wednesday dispelled concerns about deflation in the world's largest economy and added to signs at the start of this week that China is recovering from the coronavirus crisis faster than previously thought.
"We could be in the early innings of a reflationary theme in markets," said Wei Liang Chang, a macro strategist at DBS.
"This should lift risky assets such as equities, support inflation hedges such as gold , as well as catalysing a broader drop in the dollar."
Kuala Lumpur .KLSE rose nearly 1% ahead of second-quarter gross domestic product numbers due on Friday, which are expected to show a contraction for the first time in more than a decade. eyes are on an update of Beijing and Washington's Phase 1 trade pact due this weekend, with a number of analysts arguing that moves by U.S. President Donald Trump against Chinese social media companies may prove to be in place of economically damaging trade tariffs.
White House economic adviser Larry Kudlow said on Wednesday the trade deal was "fine right now".
"U.S.-China relations will always pose risks to Asia, but so long as the threat of new tariffs does not return, markets can tolerate the circumscribed and limited moves that have been enacted this year," DBS' Chang said.
Both Chinese stocks .SSEC and the yuan CNY=CFXS were flat to marginally lower.
** Malaysia GDP likely fell 10% in April-June - Reuters Poll
** Indonesian 3-year benchmark yields ID3YT=RR down 1.9 basis points to 5.239%
Asia stock indexes and currencies at 0739 GMT COUNTRY
DAILY % YTD %
DAILY % YTD % Japan
+0.23 +1.85 .N225
-0.06 +0.29 .SSEC
-0.07 -4.67 .NSEI
-0.20 -5.67 .JKSE
0.19 -16.77 Malaysia
+0.02 -2.41 .KLSE
-1.01 Philippines PHP=
+0.26 +3.79 .PSI
1.71 -21.98 S.Korea
+0.17 -2.27 .KS11
+0.07 -1.94 .STI
1.43 -19.33 Taiwan
+0.46 +2.38 .TWII
+0.10 -3.61 .SETI
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