* Graphic: World FX rates tmsnrt.rs/2egbfVh * Graphic: Foreign flows into Asian stocks tmsnrt.rs/3f2vwbA * Tech-heavy South Korean, Taiwan stock markets fall most * Malaysian 10-yr bond yields at highest since July 1, 2020 * Dollar firms, Indonesia's rupiah hits over nine-week low By Rashmi Ashok Feb 26 (Reuters) - Asian equities slid and bond yields spiked on Friday after a sharp rise in U.S. Treasury yields, as expectations for higher inflation and economic growth increased, making investors doubt how long central banks would be able to keep interest rates low. Overnight, the 10-year yield touched its highest level in a year at 1.614%, causing a sell-off in U.S. equities. "The bond market is signalling disbelief that the Fed could continue keeping rates at such low levels in the face of a recovering economy and rising commodity costs," analysts at OCBC wrote in a note. They warned that further turmoil in equity markets was expected if bond yields continued rising as investors look to rebalance their portfolios. Rising bond yields threaten the allure of stocks' dividend yield, while companies also face a higher debt-servicing burden because of steeper borrowing costs, making investing in the relatively riskier stocks less attractive overall. High-yielding bond markets saw steeper selloffs, with India's 10-year bond yield climbing to its highest since August last year at 6.215%, from Thursday's close of 6.182%. Malaysia's 10-year bond yields surged to 3.054%, hitting their highest since July 1, 2020. Indonesian yields, however, remained stable for a second session after the Finance Minister on Wednesday said 2021 financing plans might be scaled back by tapping unspent funds from 2020. Indexes in South Korea and Taiwan, whose technology stocks have come under added pressure amid the spike in global yields due to fears they may be over-valued, bore the brunt of the sell-off, falling 3.3% and 2.9%, respectively. Philippine stocks and the peso were the sole gainers in the region on reopening for trade after a local holiday on Thursday. The rise came after a subdued performance through the week when regional stocks had seen bigger gains. Malaysian stocks also saw relatively thinner losses, after data showed exports rose 6.6% in January, buoyed by higher shipments of electrical and electronic goods as well as rubber products, while imports slowed slightly. The growing view that ultra-low interest rates may be raised sooner than expected supported the dollar, which put pressure on most Asian currencies. The South Korean won slipped as much as 1.5% to a three-week low, while the Indonesian rupiah fell 0.9% to a more than nine-week low of 14,201 per dollar. The Indian rupee fell nearly 1% against the dollar. The currency is set to end the week 0.5% weaker, after six-consecutive weeks of strengthening amid improved economic outlook and dollar weakness. Thai markets were shut for a local holiday. HIGHLIGHTS: ** In the Philippines, top index gainers are Bank of the Philippine Islands up 5.83% and Robinsons Retail Holdings Inc up 4.72% ** Top losers on the Singapore STI include: Venture Corporation Ltd down 2.23% and Capitaland Ltd down 2.17% ** Singapore's 10-year benchmark yield is up 4.7 basis points at 1.352% Asia stock indexes and currencies at 0450 GMT COUNTRY FX RIC FX FX INDE STOCKS STOCK DAILY YTD % X DAILY S YTD % % % Japan +0.02 -2.78 <.N2 -2.84 6.80 25> China <CNY=CFX -0.26 +0.87 <.SS -1.84 1.33 S> EC> India -0.90 -0.01 <.NS -1.56 6.30 EI> Indones -0.85 -1.13 <.JK -1.33 3.80 ia SE> Malaysi -0.25 -0.69 <.KL -0.24 -3.04 a SE> Philipp +0.41 -1.52 <.PS 1.05 -4.38 ines I> S.Korea <KRW=KFT -1.43 -3.35 <.KS -3.25 4.36 C> 11> Singapo -0.26 -0.59 <.ST -0.98 3.54 re I> Taiwan -0.18 +0.63 <.TW -2.53 8.85 II> (Reporting by Rashmi Ashok in Bengaluru. Editing by Gerry Doyle)
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