EMERGING MARKETS-Strong dollar dents Asian FX; rupiah, won hurt by bond outflows

    * Graphic: World FX rates
    * S. Korean won leads decline, stocks up ~3% 
    * Most Asian equities set to post biggest weekly gains since
    * Singapore shares lifted by banks

    By Anushka Trivedi
    Jan 8 (Reuters) - Indonesia's rupiah and the South Korean
won led declines in Asian currencies on Friday as climbing U.S.
yields lifted the greenback's appeal, while most stock indexes
were set to end the first week of the new year higher.
    The rupiah and the won, both eased about
0.7% as investors dumped the countries' bonds in favour of U.S.
debt, while the Malaysian ringgit and the Thai baht
 fell 0.1% and 0.4%, respectively.
    The rupiah, which underpins one of Asia's most popular bond
markets for foreign investors, hit a more than one-week low.
Indonesia's 10-year benchmark yields were up 23.1
basis points at 6.26%, their highest in more than a month.
    Yields rise when bond prices fall.
    "The rebound in the dollar overnight, helped in part by
rising U.S. bond yields, has seen Asian currencies open weaker
today," said Khoon Goh, head of Asia research at ANZ.
    The won was set to mark its worst day since November despite
a rally in local stocks bringing inflows as long
positions in the currency were unwound, Goh added.
    The Treasury yield curve steepened, indicating continued
economic expansion, as yields on the longer end of the curve
 stayed over 1% after Democrats won control of the
U.S. Senate on Wednesday, raising hopes for more fiscal
    The dollar found some support overnight, but analysts expect
this bounce to be temporary, banking on vaccine rollouts to
support economic growth in Asia and appreciation in the
    Equities in Asia continue to ride on U.S. stimulus euphoria
in tandem with global markets, on expectations that more fiscal
spending in the world's biggest economy will spur trade and
    Most regional indexes were on course to notch their best
week since mid-November.
    Seoul's benchmark led gains as it surged almost 3% to take
this week's gains to a whopping 8.6%, set for its best weekly
performance since March.
    Singapore shares, which had failed to join in the
year-end rally in 2020, rose 1.8% to a ten-month peak, with
financials tracking their U.S. peers to drive gains.
    ** China stocks retreat from a 13-year high on
rising Sino-U.S. tensions
    ** The most liquid 3-year Korean treasury bond yield rose by
2.4 basis points to 0.987%    
    ** Top gainers on the Singapore STI: United Overseas
Bank Ltd up 3.1 %, DBS Group up 2.8% and
Oversea-Chinese Banking Corporation Ltd up ​2.7% 

 Asia stock indexes and currencies at                                                    
 0441 GMT                                                                    
 Japan                          -0.05      -0.59                       1.75          1.92
 China                          +0.17      +0.95                      -0.62          2.33
 India                          -0.03      -0.39                       0.74          1.86
 Indonesia                      -0.64      +0.43                       1.66          4.63
 Malaysia                       -0.12      -0.50                      -0.17         -1.66
 Philippines                    +0.05      -0.14                       1.86          1.57
 S.Korea                        -0.75      -0.85                       2.74          8.40
 Singapore                      -0.08      -0.36                       1.81          4.07
 Taiwan                         +1.51      +1.71                       1.23          4.54
 Thailand                       -0.37      -0.50                       1.25          5.75
 (Reporting by Anushka Trivedi in Bengaluru; Editing by Karishma