EMERGING MARKETS-Taiwan leads losses as Asian markets fall on inflation anxiety

© Reuters.

* Graphic: World FX rates http://tmsnrt.rs/2egbfVh
* Graphic: Foreign flows into Asian stocks https://tmsnrt.rs/3f2vwbA
* Taiwan stocks mark worst session since March 19, 2020
* Taiwan finmin steps in to calm equity markets
* Philippine c.bank keeps rates at record low

By Rashmi Ashok
May 12 (Reuters) - Taiwan stocks closed 4% lower on
Wednesday and clocked their worst day in more than a year as
authorities mulled tighter restrictions to tackle COVID-19
cases, while other Asian equities fell on concerns of growing
U.S. inflationary pressure.
Equities in Taipei .TWII pulled back from early losses of
nearly 8.6% while the Taiwan dollar TWD=TP recovered to hold
steady after the country's deputy finance minister stepped in to
call for calm, saying the stock market's fundamentals were
sound.
Risk appetite took a beating after health authorities said
they may raise the country's COVID-19 alert level in "coming
days", which would mean closure of non-essential businesses,
after a cluster of six new cases with no clear infection source
was found.
Even a small number of cases poses a huge challenge for the
island that has kept a tight lid on community outbreaks.
As of April-end, Taiwan stocks rose more than 100% from
their lowest levels in March last year, buoyed by strong demand
for the country's chips and electronics exports as the
work-from-home shift boosted demand for home electronics.
The Philippine central bank kept its benchmark interest
rates unchanged at a record low, as widely expected, in a bid to
support economic recovery amid a recent spike in COVID-19 cases.
Shares closed 1.4% lower at six-month low prior to the
decision. Currencies and stocks in export-focused nations fell most,
with shares in Seoul .KS11 slipping 1.5% and the won
KRW=KFTC weakening 0.5%. Thai equities .SETI lost 0.8% and
the Thai baht THB=TH weakened 0.3%.
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 it may
need to hike rates more quickly and aggressively than expected.
The 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.
Indonesian markets were closed for the Eid festival. Markets
in India, Malaysia and Singapore will also be on holiday on
Thursday for the festival.

HIGHLIGHTS:
** Thailand's 10-year government bond yields are down 1.5
basis points at 1.67%​​
** In the Philippines, top index losers are Megaworld Corp
MEG.PS , which dropped 5.37%, and Metro Pacific Investments
Corp MPI.PS that fell 4.46%
** Top losers on FTSE Bursa Malaysia Kl Index .KLSE
include Telekom Malaysia Bhd TLMM.KL , down 2.42%, and Sime
Darby Plantation Bhd SIPL.KL that slipped 2.36%

Asia stock indexes and
currencies at 0808 GMT
COUNTRY FX RIC FX FX INDEX STOCKS STOCKS
DAILY YTD % DAILY YTD %
% %
Japan JPY= -0.16 -5.09 .N225 -1.61 2.56
China .ssec="" 0.61="" -0.30 S>
India INR=IN -0.15 -0.52 .NSEI -0.52 5.66
Malaysia MYR= -0.19 -2.52 .KLSE 0.31 -2.75
Philippines PHP= +0.10 +0.46 .PSI -1.43 -12.65
S.Korea .ks11="" -1.49="" 10.03 C>
Singapore SGD= -0.20 -0.53 .STI -0.70 9.79
Taiwan TWD=TP -0.01 +1.89 .TWII -4.11 7.94
Thailand THB=TH -0.26 -3.88 .SETI -0.79 8.08

(Editing by Sherry Jacob-Phillips)