EMERGING MARKETS-Malaysia stocks slump on COVID-19 curbs, Asia pauses gains

    * Banks lead Malaysian declines after new lockdown 
    * Analysts expect economic harm from Malaysia's new lockdown
    * Rupiah falls as U.S. 10-year yields top 1%

    By Nikhil Nainan
    Jan 12 (Reuters) - Malaysia led losses across Southeast
Asian stock markets on Tuesday after a state of emergency was
declared in the country to curb the spread of COVID-19,
threatening its economic recovery and sending banking stocks
sharply lower. 
    Malaysia's main stock index pared some of its 1.6%
decline by noon, while other Asian stock markets tracked
overnight losses on Wall Street. South Korean shares
were closed down 0.7%. The prospects for further U.S. fiscal
stimulus had boosted several Asian markets on Monday.
    Malaysia's King Al-Sultan Abdullah declared a nationwide
state of emergency on Tuesday to curb infections, a day after
the prime minister announced a 14-day lockdown in the capital
and five states.
    Alex Holmes, an emerging markets economist at Capital
Economics, said the lockdown will likely "hit the economy hard,"
prompting the research firm to cut its 2021 growth forecast to
7% from 10%. 
    Holmes also expects the central bank to cut rates next week
from the current 1.75%. The ringgit weakened 0.2%.
    Meanwhile, CGS-CIMB Securities reckons the restrictions
could be extended and estimates every fortnight of curbs will
shave 0.7% off Malaysia's 2021 growth forecast.
    Indonesia's rupiah dipped 0.5% against the dollar,
which tracked U.S. Treasury yields higher. Ten-year U.S. yields
topped 1% last week for the first time since March last year. 
    The rupiah is generally favoured by foreign investors
seeking to tap Indonesia's high-yielding debt. 
    TD Securities expects short-term pressure to continue on the
rupiah as U.S. yields rise and inflows into local bond markets
temporarily ease. 
    The Taiwanese dollar, which tends to move in wider
ranges, strengthened 1.8%. Taiwan's central bank has sent
inspectors to domestic banks to investigate whether exporters
are speculating in foreign currency as the local currency has
soared in recent months, Reuters reported on Monday.

    ** Indonesian 3-year yields are up 7.7 basis points at
5.071%, while 10-year benchmark yields are up 2.80 basis points
at 6.246%
    ** CIMB Group Holdings, RHB Bank Bhd and
Hong Leong Bank Bhd all slumped more than 3%
        Asia stock indexes and currencies at 0656 GMT      
 COUNTRY      FX          FX       FX      INDEX    STOCKS   STOCKS
              RIC         DAILY %  YTD %            DAILY %  YTD %
 Japan                    +0.08    -0.88            0.09     2.62
 China                    +0.29    +1.04            1.92     3.64
 India                    +0.09    -0.34            0.23     3.84
 Indonesia                -0.49    -0.78            -0.04    6.71
 Malaysia                 -0.20    -0.94            -0.91    -1.51
 Philippines              +0.18    -0.02            -0.64    1.66
 S.Korea                  -0.24    -1.25            -0.71    8.79
 Singapore                +0.14    -0.59            -0.08    4.84
 Taiwan                   +1.75    +1.74            -0.36    5.21
 Thailand                 -0.10    -0.63            -0.19    5.81
 (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Ana
Nicolaci da Costa; Editing by Shailesh Kuber)