* Won hits highest level in a week
* Yuan and yen both take a breather
* Traders await U.S. CPI print

By Rishav Chatterjee
       Sept 12 (Reuters) - The South Korean won emerged as the
only major gainer on Tuesday amid muted Asian currencies as
caution prevailed ahead of keenly awaited inflation data from
the United States, which will pave the way for the interest rate
outlook.
    The won gained 0.5% against the dollar, hitting
its highest in a week, while equity markets in Seoul were
dragged down by heavyweight battery and chip manufacturers. 
    "The Korean won is playing catch-up to gains seen in the
Japanese yen and the Chinese yuan, while the dollar retreated,"
said Christopher Wong, currency strategist at OCBC. 
    The U.S. inflation report on Wednesday is one of the key
data points that markets participants will be watching closely
in terms of further prospects for the U.S. dollar.
    "A lower-than-expected inflation may slow USD's rise and
provide a breather for Asian FX, but the risk is a higher print
that could potentially un-nerve risk sentiments, reinforcing
market expectations for further rate hikes," Wong said.
    The Federal Reserve, which has left the door open to further
interest rate hikes, has pledged to remain agile in its response
to economic data.
    Financial markets have baked in a pause at the conclusion of
the Fed's Sept. 19-20 monetary policy meeting, beyond which the
path forward is less certain, according to CME's FedWatch tool.
           
    The Chinese yuan took a breather and was trading
almost flat during the day, while the stock market in the
world's second largest economy was also more or less unchanged.
    Chinese authorities in recent weeks have rolled out a series
of measures, such as easing borrowing rules, to support the
debt-riddled property sector.
    "There are nascent signs of Chinese economic stabilization,
but recent data can hardly be extrapolated to call a recovery
yet," Maybank analysts said in a note. 
    The greenback took a breather after falling the most in two
months and was trading flat at 104.57. 
    The yen was slightly weaker following its strong
advances in the previous session. 
    The Thai baht fell 0.1% as traders exercised
caution after the country's new Prime Minister's policy agenda
was opposed in parliament. 
    Shares in Bangkok, however, gained 0.3%, whereas stock
markets in Indonesia and Malaysia fell 0.3% and
0.4%, respectively.
    
        
    
  Asia stock indexes and                             
 currencies at 0329 GMT                         
 COUNTRY  FX RIC        FX     FX  INDE  STOCK  STOCK
                     DAILY  YTD %     X      S  S YTD
                         %               DAILY      %
                                             %  
 Japan               -0.04  -10.5  <.N2  0.61   25.18
                                9  25>          
 China                           EC>          
 India               +0.00  -0.37  <.NS  -100.  -100.
                                   EI>      00     00
 Indones             -0.10  +1.50  <.JK  -0.28   1.36
 ia                                 SE>         
 Malaysi             +0.00  -5.84  <.KL  -0.42  -3.11
 a                                 SE>          
 Philipp             +0.11  -1.75  <.PS   0.19  -4.89
 ines                              I>           
 S.Korea                         11>          
 Singapo             +0.00  -1.51  <.ST  -0.03  -1.05
 re                                I>           
 Taiwan              -0.09  -4.07  <.TW   0.70  17.05
                                   II>          
 Thailan             -0.17  -2.69  <.SE   0.31  -7.37
 d                                 TI>          
 
    
    
    
    
    
    
    
    HIGHLIGHTS:    
    ** Thailand's new PM draws flak in parliament for 'aimless'
economic agenda
    ** Malaysia to ban export of rare earths to boost domestic
industry


    
 (Reporting by Rishav Chatterjee in Bengaluru; Editing by Sonia
Cheema)