EMERGING MARKETS-EM equities rise on oil retreat; Fed decision in focus

* Stocks gain 1.8%, FX up 0.1%

* S. Africa's annual inflation slowed in February

* Dubai and Egypt's stock indexes up over 2% each

* Fed rate decision and economic outlook awaited

By Twesha Dikshit

March 18 (Reuters) - Emerging markets stocks gained on Wednesday as a fall in crude prices aided sentiment, while investors awaited the U.S. Federal Reserve rate decision later in the day. The Middle East war showed no signs of abating, with Iran launching cluster warheads against Tel Aviv in retaliation for Israel killing its security chief. Despite the Strait of Hormuz remaining largely closed, a resumption of crude exports from Iraq to Turkey's port via a pipeline quelled some concerns over supplies and pressured oil prices.

MSCI's index of EM equities advanced 1.8%, while a similar gauge for currencies ticked up 0.1%. Stocks had lost more than 8% over the last two weeks since the war began, while FX was down over 2%.

Central banks in Brazil, Taiwan, Ukraine, the Czech Republic and Russia are meeting this week, and markets will closely monitor how policymakers navigate a potential hike in inflation due to energy supply concerns.

"Inflation is now expected to rise globally, but EM central banks have generally established sufficient policy credibility in recent years such that few are expected to ease policy aggressively into a supply shock, even if growth faces significant challenges in the near term," said BNY's EMEA macro strategist, Geoff Yu.

Bourses in the Middle East were mostly higher with those in Dubai, Egypt and Qatar gaining between 1.4% and 2.6%. The United Arab Emirates' central bank unveiled a package to help boost banks' liquidity as Gulf economies try to weather the impact of the Iran crisis. Official data showed South Africa's annual inflation slowed in February, reaching the central bank's target of 3%. The benchmark index dipped 0.4% while the rand ticked up 0.3%.

Several economists still expect the central bank to keep rates steady during its March 26 meeting due to risks amid the U.S.-Israel war against Iran.

Greece's blue-chip index added 1.1%, while stock indexes in the Czech Republic, Poland and Hungary rose about 0.7% each.

The Hungarian forint weakened 0.2% against the euro, while other regional currencies were little changed. Over in Asia, gains were led by AI-heavy markets South Korea and Taiwan, as investors bought back into the technology. The benchmark South Korea index jumped 5%, while Taiwan's rose 1.5%. Other regional stocks also gained.

Investors will next turn to the Fed's meeting, where policymakers are widely expected to keep rates steady, but statements on the outlook for the U.S. economy, inflation and monetary policy will be closely scrutinised.

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For RUSSIAN market report, see (Reporting by Twesha Dikshit; editing by Harikrishnan Nair)