EMERGING MARKETS-Taiwan stocks eye worst day since 1994 on COVID-19 risk; Asian markets dip

    * Graphic: World FX rates
    * Graphic: Foreign flows into Asian stocks
    * Taiwan stocks down 8.6%, FX down 0.2% on possible virus
    * Philippine stocks at lowest since Oct 2020 
    * Philippine set to keep rates unchanged at record
    * Asian FX, stocks pressured as U.S. inflation views build

    By Rashmi Ashok
    May 12 (Reuters) - Taiwan stocks slid more than 8% on
Wednesday and were headed for their worst day in over 26 years
as authorities mulled tighter restrictions to tackle a rise in
domestic COVID-19 cases, while other Asian equities fell on
concerns over higher inflation. 
    Equities in Taipei tumbled 8.6% and the Taiwan
dollar weakened 0.2% as health authorities said they
may raise the country's COVID-19 alert level in "coming days".

    The possible restrictions, which would mean closure of
non-essential businesses, came after a cluster of six new cases
with no clear infection source was found on Tuesday, an unusual
outbreak for the island that has kept a tight lid on community
    The equity rout prompted the country's deputy finance
minister to call for calm, saying the stock market's
fundamentals were sound. 
    Taiwan stocks had rallied more than 100% from lows in March
last year to end-April, buoyed by strong demand for the
country's chips and electronics exports as the work-from-home
shift boosted demand for home electronics. 
    Elsewhere, shares in Seoul slipped 1.7%, while Thai
equities were off nearly 1%. Regional currencies were
also weaker, with export-focused units such as the won
, the Singapore dollar and baht losing
    Despite various U.S. Federal Reserve officials reiterating a
firmly dovish policy stance, investors worried that higher
inflation from a spike in commodity prices could force the Fed
to raise interest rates. U.S. inflation data due later in the
day also added to nerves. 
    "Markets are calling the Fed's bluff, fearing that the Fed
may need to hike rates more quickly and aggressively than
expected. Today's U.S. CPI release will be a big focus for more
clues," said Mitul Kotecha, chief EM Asia and Europe strategist
at TD Securities.
    "Should the Fed hint at an earlier taper, it would likely
put pressure on Asian markets, with a likely firmer dollar
weighing on Asian FX and higher U.S. yields pressurising Asian
local currency bonds and equities," Kotecha said.
    While Asian central banks are less sensitive to U.S. rates
than previously, inflationary pressures in the region were
starting to build, he added.
    The Philippine market slipped 1.5% to hit its lowest
since Oct. 30, 2020. The central bank is slated to announce its
monetary policy decision soon, where it is expected to keep
interest rates unchanged at a record low.
    Indonesian markets were closed for the Eid festival.
    ** Taiwan Cement Corp and Asia Cement Corp
 were among top losers on the Taiwan Stock Index, down
over 5% each
    ** Malaysia's 10-year benchmark yield is up 0.5 basis points
at 3.142%​,​ while the 3-year benchmark yield is up 0.1 basis
points at 2.061%​​ 
    ** In the Philippines, top index losers are Megaworld Corp
, down 4.03%, and SM Prime Holdings Inc, down

  Asia stock indexes and                              
 currencies at   0420 GMT                        
                     DAILY  YTD %     X   DAILY  S YTD
                         %                    %      %
 Japan               -0.22  -5.15  <.N2   -1.88   2.29
 China    <CNY=CFX   -0.19  +1.36  <.SS   -0.01  -0.91
          S>                       EC>           
 India               +0.00  -0.37  <.NS   -0.72   5.45
 Malaysi             -0.27  -2.59  <.KL    0.26  -2.80
 a                                 SE>           
 Philipp             -0.01  +0.34  <.PS   -1.53  -12.7
 ines                              I>                4
 S.Korea  <KRW=KFT   -0.44  -3.41  <.KS   -1.97   9.49
          C>                       11>           
 Singapo             -0.27  -0.60  <.ST   -0.63   9.87
 re                                I>            
 Taiwan              -0.17  +1.72  <.TW   -4.97   6.97
 Thailan             -0.45  -4.07  <.SE   -1.09   7.76
 d                                 TI>           

 (Reporting by Rashmi Ashok; editing by Richard Pullin)