EMERGING MARKETS-Currencies rise as dollar retreats, South Korea's won advances

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China's goal to keep yuan stable will not change: deputy c.bank governor

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U.S. nods to Japan, S.Korea concerns over slumping FX

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Short bets on Asian FX mount as firm dollar dents confidence

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IMF ready to support Sri Lanka's discussions with bondholders

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EM currencies up 0.2%, stocks add 0.7%

By Bansari Mayur Kamdar

April 18 (Reuters) - Currencies in emerging markets gained on Thursday as the dollar rally took a breather, while the South Korean won jumped after the finance chiefs of U.S., Japan and South Korea agreed to cooperate on foreign exchange.

The MSCI index for emerging market currencies was up 0.2% by 0817 GMT.

The dollar index was off 0.1%, after hitting its highest level in 5-1/2 months earlier this week as strong U.S. economic data and persistent inflation dashed bets of near-term rate cuts by the Federal Reserve and tensions in the Middle East added to the greenback's safe-asset appeal.

"The hawkish Fed expectations support a stronger U.S. dollar, but the authorities around the world are not happy to see the U.S. dollar rally," said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank.

The won firmed for its second straight session since hitting a 17-month low on Tuesday, after U.S., Japan and South Korea agreed to "consult closely" on foreign exchange markets in their first trilateral finance dialogue on Wednesday.

Other currencies in Asia also followed suit, with the Indonesian rupiah snapping two straight days of heavy losses against a softening greenback.

India's rupee was subdued, with the South Asian country set to begin the world's largest general elections on Friday.

Bearish positions on most Asian currencies firmed, a Reuters poll showed, intensifying steadily from the start of the year as repricing of rate cut bets after strong U.S. economic data pushed the dollar higher.

On Thursday, China's yuan slightly firmed against a softer dollar, while the central bank vowed to maintain yuan stability.

China has the confidence, the conditions, and ability to keep its foreign exchange market stable, Zhu Hexin, deputy governor at China's central bank, told a news conference.

Meanwhile, official data showed foreign holdings in China's onshore yuan bonds increased for the seventh consecutive month in March.

South Africa's rand inched up 0.2% against the weakening dollar after ending the previous session little changed following inflation data.

South Africa's central bank is now predicted to deliver only 50 basis points of interest rate cuts this year as inflation is seen taking slightly longer to return to the bank's comfort zone, a Reuters poll found.

Currencies in central and eastern Europe extended gains against the euro, with Poland's zloty, Hungary's forint and Czech crown up 0.1%-0.2%.

The European Union will consider Poland's defense spending, the highest in NATO in terms of economic output, as the bloc pushes for member states to clamp down on excessive deficit levels, the country's Finance Minister Andrzej Domanski said.

The International Monetary Fund (IMF) spokesperson said the fund stands ready to support Sri Lanka's discussions with international bondholders and will provide a formal assessment after the parties reach a tentative agreement-in-principle.

Overall, the IMF, World Bank and current G20 president Brazil said on Wednesday there had been significant progress on global debt issues in recent months, citing new agreements on desired timelines and comparability of treatment.

(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Sonia Cheema)