EMERGING MARKETS-Singapore shares lead Asia lower as Fed outlook weighs on optimism

* Thai baht at more than 4-month high
* Singapore stocks outpace declines in region

By Nikhil Nainan
June 11 (Reuters) - Led by Singapore, shares in Asia's
emerging markets slipped on Thursday, as the U.S. Federal
Reserve's forecasts dented hopes that economies would recover
more strongly once lockdowns introduced to slow the coronavirus
pandemic are lifted.
But a drop in U.S. yields sparked a rally in regional
currencies and sent the Thai baht to a more than 4-month high.
Bank-heavy Singapore led losses, with the Straits Times
Index .STI down 2.5%, outpacing drops of less than 1% in
Jakarta .JKSE , Manila .PSI and Kuala Lumpur .KLSE .
The Fed forecast the U.S. economy would shrink at 6.5% this
year and promised to keep pumping liquidity into markets.
Chairman Jerome Powell also raised the prospect of yield
curve control, and that pressed down longer tenor U.S. yields
and made Asia's higher-paying debt look more attractive.
The Thai baht THB=TH rose as much as 1% to 30.83 per
dollar, its strongest since late January, even as the greenback
rose against most other currencies on Thursday and benchmark
10-year Thai bond yields TH10YT=RR fell to a near two-week
low.
Yields fall when prices rise.
"With the Fed outlining a stridently dovish stance in
yesterday's FOMC, making clear that rates are likely to remain
low for long, investors will be encouraged to pour funds into
higher-yielding Asian markets," said Wei Liang Chang, a macro
strategist at DBS Bank.
While gains were held back by a rising dollar .DXY , the
Indonesian rupiah IDR= and Malaysian ringgit held their
ground, with the rupiah IDR= at 13,940 per dollar and the
ringgit steady at 4.248 per dollar.
"Given Indonesia's high bond yields, bond flows are likely
to persist, which should anchor bullish rupiah sentiment," said
DBS' Chang.
In Singapore, interest rate sensitive sectors like banking
and real estate stocks led equity declines with CapitaLand
CATL.SI down nearly 4% and southeast Asia's biggest lender DBS
Group Holdings DBSM.SI lost 2.4%.
Elsewhere, Philippine shares .PSI was down 0.9%, but had
come off lows having lost 2.7% loss earlier in the session. In
Thailand .SETI , where shares have been rallying from
multi-year lows struck in March, were down 0.4%.
The Singapore dollar SGD=D3 failed to join regional
currencies' rally, easing 0.4% to S$1.389 per dollar, its
steepest fall in almost three weeks.
Emerging Asia stock indexes and currencies as at 0458 GMT:
COUNTRY FX DAILY % FX YTD % STOCKS DAILY % STOCKS YTD %
Japan +0.02 +1.44 -2.21 -4.41
China -0.11 -1.51 0.24 -3.26
India -0.21 -5.76 -0.15 -16.99
Indonesia -0.14 -0.43 -0.51 -22.28
Malaysia +0.02 -3.74 -0.97 -1.81
Philippines -0.06 +1.28 0.57 -17.13
S.Korea -0.35 -3.26 -1.14 -1.23
Singapore -0.41 -3.19 -2.49 -15.27
Taiwan +0.22 +1.54 -1.48 -3.75
Thailand +0.63 -3.38 -0.44 -10.59