Updates as of 0725 GMT

By Sameer Manekar

April 17 (Reuters) - Emerging Asian equities ticked higher on Thursday as investors assessed trade negotiations between the U.S. and Japan although concerns over the economic impact of U.S. trade policies kept sentiment in check.

The MSCI index of emerging Asian equities .MIMS00000PUS climbed as much as 0.8% following an over 1% drop on Wednesday, while a gauge of ASEAN stocks .MISU00000PUS advanced for a seventh straight session to a two-week high.

South Korea's KOSPI index .KS11 rose as much as 1% as the central bank held its interest rate steady, as widely expected, and signalled a rate cut in May.

Taiwan stocks .TWII shed 0.7%, dragged by top contract chipmaker TSMC 2330.TW, which fell 1% despite forecasting robust growth in 2025 and reporting an estimate-beating quarterly profit.

Stocks in Asia consolidated at the start of the week but tumbled on Wednesday after the U.S. unveiled curbs on some Nvidia NVDA.O chip exports to China, amplifying trade tensions between the world's two biggest economies.

Federal Reserve Chair Jerome Powell's warning on the risks of a growth downturn and a rise in inflation sent Wall Street indexes spiralling overnight.

Traders are keenly watching the outcome of U.S.-Japan trade talks, though the direction of discussions with China remains the biggest overhang.

Kenneth Tang, senior portfolio manager at Nikko Asset Management, said a long-drawn-out negotiation period would be negative for a lot of export-oriented countries in ASEAN, with Singapore, Thailand, and Malaysia being the most affected.

"Uncertainty is always the worst recipe for markets, and I think that's going to drive a more challenged environment for markets in the second half of this year," Tang said.

In Southeast Asia, Singapore stocks .STI jumped 1.6% to a nine-session high. The city-state's banks were the top gainers in the benchmark, alongside Singapore Telecommunications (SingTel) STEL.SI and ST Engineering STEG.SI which gained around 2%.

"This suggests the flight to quality rotation and that the market is taking a view they are safer and more resilient than the rest of the market."

SingTel and ST Engineering have risen 10% and 5%, respectively, so far this month, with the latter trading near an all-time high.

Benchmark gauges in Indonesia .JKSE and Malaysia .KLSE gained 0.5%, while Thailand's key equities gauge .SETI was slightly down.

A recent rally in emerging Asian currencies fizzled out as the dollar =USD held steady against a basket of major peers.

Analysts widely predict the recent gains in most Asian currencies will be short-lived as tariff-induced growth headwinds and the knock-on effect of a weak Chinese yuan intensify depreciation pressure.

Singapore's dollar SGD= slipped from a near six-month high hit earlier in the session. Thailand's baht THB=TH was anchored around its late-October highs as gold's sizzling rally supported the unit.

HIGHLIGHTS:

** Indonesia's 10-year benchmark bond yield ID10YT=RR at 6.933%

** Asian countries look to buy more US energy to offset trade imbalance

** Xi Jinping lands in Cambodia after visiting Vietnam, Malaysia

** BOJ warns US tariff uncertainty may hurt confidence, economy

** Thai central bank says to cut growth, inflation forecasts

(Reporting by Sameer Manekar in Bengaluru; Editing by Eileen Soreng)

((Sameer.Manekar@thomsonreuters.com;))