EMERGING MARKETS-Emerging markets fall as Iran war drags on, Turkey eyes rate hold

* EM stocks down 1.1%, FX down 0.33%

* Energy price surge a risk to Hungary's rating - S&P

* Turkey's c.bank to pause rate cuts as U.S.-Iran war weighs

By Pranav Kashyap

March 12 (Reuters) - Emerging market assets slid broadly on Thursday as the Iran war entered its 13th day with no sign of easing, while neighbouring Turkey braced for an interest rate decision.

Stocks in Istanbul rose 0.1% on the day. The benchmark index, which got off to a strong start in January, has since slipped into marginal declines. The change in momentum comes as recent inflation data suggests the disinflation trend is losing steam, prompting the central bank to revise its year-end forecasts higher. Later in the day, Turkey's central bank is expected to pause its easing cycle once again and keep rates steady at 37%, as policymakers weigh the market fallout from the U.S.-Iran war.

U.S. President Donald Trump said it was necessary to "finish the job", while Iran told the world to brace for oil at $200 a barrel after striking tankers in Iraqi waters and other ships near the strategically crucial Strait of Hormuz.

Israeli stocks fell 1%, on course for their worst week since October 2023, while the shekel weakened to a nearly two-week low.

Stocks in Dubai fell 3.3%, dropping to their lowest level since June after having lost nearly 20% over the past eight sessions.

OIL SHOCK FEARS RESURFACE

Meanwhile, oil's surge past the $100-a-barrel mark reignited a familiar fear that has haunted markets since the Middle East conflict began: a fresh energy shock.

For economies that rely heavily on imported energy - much of Europe among them - rising oil prices could quickly spill over into broader inflation pressures.

Shaken investors sought refuge in the liquidity of the U.S. dollar, steering clear of currencies from countries seen as particularly vulnerable to oil shocks.

"The recent escalation around Iran has evolved from a geopolitical risk into a potential macroeconomic shock," said Michael Lok, Group CIO and co-CEO of asset management at UBP.

"If sustained, this will start testing the world economy's resilience, as the main risk is slower growth alongside higher inflation. Europe and much of Asia have demonstrated stronger sensitivity."

A gauge tracking Central and Eastern European equities fell 0.6%, while Hungary's forint and benchmark stock index were little changed.

A senior analyst at S&P told Reuters on Wednesday that Hungary's investment-grade credit ratings could come under pressure if the surge in energy prices deepens and proves prolonged.

In Johannesburg, stocks have already fallen 10% since the start of March, putting the market on track for what could be its first monthly decline after 14 straight months of gains - a record winning streak.

Meanwhile, Pakistan's international dollar bonds were mixed after the International Monetary Fund said it had made "considerable progress" in talks on the latest reviews of the country's bailout programme, though a staff-level agreement has yet to be reached. Discussions are continuing as officials assess the economic fallout from the Middle East conflict. (Reporting by Pranav Kashyap in Bengaluru, edititng by Andrei Khalip)