Updates for afternoon trading

By Aaditya GovindRao and Roushni Nair

Feb 28 (Reuters) - Indonesia and South Korea led a downturn in Asian currencies and stocks on Friday as the U.S. dollar strengthened and markets prepared for President Donald Trump's impending tariffs on China, Mexico, and Canada.

The Korean won > lost as much as 1.3% to a three-week low of 1,463.9 against the U.S. dollar. Equities in Seoul .KS11 dropped as much as 3.4% and headed for their worst day since August.

The MSCI gauge of emerging market currencies .MIEM00000CUS lost 0.3%, while a gauge of emerging Asian equities .MIMS00000PUS dropped 1%.

Overnight, Trump said his proposed 25% tariffs on Mexican and Canadian goods will take effect on March 4 along with an extra 10% duty on Chinese imports, sapping expectations for a further delay in their implementation.

That prompted the dollar index =USD to hit a two-week peak, against a basket of currencies. USD/

"Markets are now thinking what is next. After tariffs on China, Mexico and Canada, tariffs on products such as cars and semiconductors may materialise," said Jeff Ng, head of Asia macro strategy at Sumitomo Mitsui Banking Corporation.

Such tariffs will negatively impact the currencies of trade-open economies such as South Korea, Indonesia, Malaysia and Thailand, Ng said.

The Indonesian rupiah IDR= dropped 0.8% to its lowest level since March 2020 and was headed for its fifth consecutive monthly loss. Shares in Jakarta .JKSE fell 2.5% and were down 11.1% for February, their worst monthly performance since March 2020.

The Thai baht THB=TH dropped 0.2% and was set for its biggest monthly drop since November, following a surprise rate cut from the central bank.

The Philippine peso PHP= was flat but was 0.8% higher for the month. The Philippine central bank had unexpectedly kept its key interest rate steady earlier this month.

Among other regional equity markets, Thai stocks .SETI fell 1.6% and headed for their biggest monthly drop since March 2020.

Malaysian shares .KLSE lost 0.7%, with the central bank's monetary policy decision next week on investors' radar.

Major ASEAN indexes are likely to continue to be volatile next week as the additional U.S. duties on China, Southeast Asia's biggest trading partner, come into effect, said Jason Kuan, director of Investment Research and Advisory at CIMB Singapore.

Beijing said it opposed Trump's latest tariff threat and promised retaliation to protect its interests.

Chinese stocks .SSEC closed 2% lower. The National People's Congress meeting next week will be in focus, with investors expecting additional stimulus amid Trump's trade policies.

HIGHLIGHTS:

** India's economic growth expected to have picked-up in the October to December quarter

** Thai factory output falls 0.85 y/y in January, better than forecast

** China's manufacturing activity set to contract for second month in Feb

(Reporting by Aaditya Govind Rao in Bengaluru; Editing by Rashmi Aich and Eileen Soreng)

((Aaditya.govindrao@thomsonreuters.com))