Updates for afternoon trade

By Roushni Nair

March 6 (Reuters) - Most Asian assets sank toward their heaviest weekly loss since the pandemic on Friday, as Middle East conflict-driven oil shocks forced investors to unwind one of this year's strongest emerging-market trades.

MSCI's EM index .MSCIEF is 6.5% lower this week and an MSCI index of EM currencies .MIEM00000CUS has shed 1.4% - the sharpest weekly drops since March 2020.

U.S. and Israeli strikes that killed Iran's supreme leader and all but shut the Strait of Hormuz have choked global oil supply and accelerated the flight to safety.

As the war escalated on Thursday, U.S. President Donald Trump said the United States should share in determining Iran's next leader.

Meanwhile, joint U.S.-Israeli strikes pounded targets across the country and fresh bombardment struck Gulf cities.

Selling has been most severe in Latin America, but Asian markets also logged steep losses.

South Korea's Kospi .KS11 reversed earlier losses to trade flat on the day. It was headed for a 10.6% weekly drop. Thailand's SET .SETI eased 0.5%, and remained on course for an almost 8% weekly fall.

Indonesian shares .JKSE lost more than 2% and faced their steepest weekly drop since 2020.

South Korea and Thailand had each tripped circuit breakers earlier in the week after losses topped 8% in a single session.

The dollar index .DXY was eyeing a 1.4% weekly rise, while Brent lcoc1 has jumped more than 15% since the conflict began.

A broad risk-off wave defined the week, driven by rising inflation concerns, worsening external balances and a repricing of rate-cut bets in net importers like Thailand, South Korea, India and the Philippines.

Elias Hilmer, markets economist at Capital Economics, said the size of the sell-off partly reflected how sharply emerging market assets had rallied over the past year, leaving valuations stretched and vulnerable even before the conflict began.

Markets, which had posted the strongest gains - notably Korea, Taiwan and South Africa, have been hit hardest as higher energy prices and the unwinding of speculative froth pulled them lower, he added.

In China, officials struck a cautious tone at the National People's Congress, maintaining modest growth goals and a steady fiscal stance.

China's yuan CNY=CFXS, up 0.2% on the day, looked set to snap a 13-week winning streak to post its worst week since February 2025.

The won KRW=KFTC fell more than 2% on the week despite firming 0.88% on Friday. The baht THB=TH traded flat, the ringgit MYR= gained 0.2% and the Philippine peso PHP= added 0.22%. The Singapore dollar SGD= rose 0.23%.

Indonesia also faced pressure from recent outlook downgrades by Moody's and Fitch, adding to concerns over policy credibility.

HIGHLIGHTS:

** South Korea's February headline inflation at 2.0% y/y, slower than expected

** ADB sees modest growth impact on Asia if Middle East conflict lasts

(Reporting by Roushni Nair in Bengaluru; Editing by Sumana Nandy)

((Roushni.Nair@thomsonreuters.com))