.

By Sameer Manekar and Rajasik Mukherjee

June 24 (Reuters) - South Korean equities fluctuated on Wednesday as expectations of U.S. interest rate hikes and concerns over stretched valuations prompted investors to rethink their leveraged bets following a recent AI-driven rally.

Indonesia's main equities gauge .JKSE erased early gains, trading 2% in red, and the rupiah IDR= inched closer to the key 18,000 mark, after index provider MSCI deferred its review of the country's emerging-market status to November.

Thailand's central bank stood pat on its rates, as expected, doing little to calm markets. The baht THB=TH hovered near a 13-month low against the dollar, while Bangkok stocks .SETI held on to a 0.5% gain.

"Believe there are some green shoots visible in Thailand with growth showing signs of rebounding, driven by increased foreign direct investments and supportive policies, while tourism has been more resilient than expected," said Chandresh Jain, EM Asia Rates and FX Strategist, BNP Paribas.

"At the same time, the recent fall in oil prices has alleviated upside risks to inflation, which will allow the BoT to keep rates on hold for some time."

Elsewhere, the Philippine peso PHP= weakened for a seventh consecutive day, while Singapore stocks .STI touched a record high.

The Indian rupee INR= recouped early losses to trade flat, supported by likely central bank intervention.

VOLATILITY MARS KOSPI

South Korea's benchmark KOSPI index .KS11 climbed as much as 4% in early trade, rebounding from a double-digit drop in the previous session. However, the recovery momentum eased by noon in Seoul.

After falling as much as 1.5%, the benchmark gauge closed more than 3% higher, as retail investors rushed to buy the dip.

The KOSPI volatility index .KSVKOSPI climbed to a record 97.72 on Wednesday, a sharp rise from the mid-70s level seen just two weeks ago.

"Elevated KOSPI volatility reflects uncertainty around the AI-driven rally, while expectations of higher-for-longer U.S. rates continue to weigh on sentiment," said Lukman Leong, an analyst at finance brokerage Doo Financial Futures.

MSCI retained South Korea in its "emerging markets" category, citing long-standing accessibility issues in the onshore foreign exchange market in its annual market classification review.

Stocks in Taiwan .TWII slipped more than 2%.

"EMERGING" CROWN, FOR NOW

Indonesia, Southeast Asia's largest economy, clung to its emerging-market status after MSCI deferred its review, giving regulators more time to deliver market reforms and avert a downgrade that could trigger billions of dollars in outflows.

Foreign investors have withdrawn 67.34 trillion rupiah ($3.75 billion) from Indonesia's equity market so far this year, per exchange data, with roughly a quarter of the outflows occurring this month alone.

"We view the announcement as largely neutral-to-slightly-positive, as the outcome was likely already well-anticipated by local investors," said Jeffrosenberg Chenlim, research head, Maybank Sekuritas.

The Jakarta Composite Index .JKSE slipped as much as 1.7%, while the rupiah weakened to 17,955 per U.S. dollar, making another run at the key 18,000 mark.

"For MSCI-sensitive foreign investors, some may prefer to remain on the sidelines, waiting for clearer evidence of credible implementation of Indonesia's shareholder transparency, free-float, and market surveillance reforms," Chenlim said.

HIGHLIGHTS:

** Thailand under no pressure to raise rates, finance official says

** Some BOJ policymakers call for faster rate hikes, summary shows

** Malaysia to ramp up support for ringgit as foreign outflows, Fed rate outlook weigh

** MSCI reclassifies Bulgaria as frontier market

Asia stock indexes and currencies at 0716 GMT
COUNTRY	FX RIC	FX DAILY %	FX YTD %	INDEX	STOCKS DAILY %	STOCKS YTD %
Japan	JPY=	-0.08	-3.12	.N225	-0.88	37.42
China	CNY=CFXS	-0.16	+2.69	.SSEC	0.11	3.58
India	INR=IN	+0.07	-5.07	.NSEI	0.65	-8.23
Indonesia	IDR=	-0.66	-7.15	.JKSE	-2.30	-31.06
Malaysia	MYR=	-0.02	-2.01	.KLSE	0.46	0.45
Philippines	PHP=	-0.54	-4.23	.PSI	-2.20	-1.02
S.Korea	KRW=KFTC	-0.74	-6.80	.KS11	3.26	101.01
Singapore	SGD=	-0.09	-0.91	.STI	0.16	12.22
Taiwan	TWD=TP	-0.52	-1.11	.TWII	-2.24	58.97
Thailand	THB=TH	-0.52	-5.80	.SETI	0.60	23.07