EMERGING MARKETS-Asian currencies drop as rate-hike fears loom

* Thai baht leads losses * Markets await Singapore's manufacturing PMI in Feb * Stocks in Manila set to mark best day in one month By Upasana Singh March 2 (Reuters) - Most Asian currencies inched lower on Thursday against a firm dollar, after a surge in U.S. yields and manufacturing data reinforced views that the Federal Reserve could get more aggressive in tightening monetary policy. Thailand's baht weakened 0.5% and Indonesia's rupiah fell 0.3%. The Singapore dollar was down 0.2% and China's yuan depreciated 0.3%. Strong factory data from China on Wednesday that showed better-than-expected economic growth in the region's biggest trading partner was overshadowed by the Institute for Supply Management (ISM) survey's measure of prices paid by manufacturers. "Sentiment is mixed," said Christopher Wong, currency strategist at OCBC. "On one hand, solid China PMIs (manufacturing purchasing managers' index) breathed life into the China reopening trade, and that saw positive spill over to risk sentiments but on the other hand ... higher ISM prices paid helped UST (U.S. Treasury) yields to march higher," Wong said. Manufacturing in the United States shrunk for a fourth straight month in February and prices for raw materials increased, suggesting inflation could remain elevated. Fed policymakers reiterated a hawkish tone, with Minneapolis Fed President Neel Kashkari saying he was inclined "to push up my policy path." Kashkari said "at this point... I lean towards continuing to raise further" beyond the 5.4% level that he had thought would be adequate to lower inflation. Markets have largely priced in a 25 basis point (bps) increase at the Fed's March 21-22 meeting, but expectations of a larger 50 bps raise have increased. The benchmark 10-year Treasury yields hit 4% for the first time since November. The two-year yields also went as high as 4.9%, their highest since 2007. Adding further pressure to riskier Asian assets, the dollar index, which measures the greenback against a basket of currencies, strengthened 0.2% to 104.60. "Traders will wait for more promising evidence from China's economic rebound in the upcoming weeks to be more bullish on Asian currencies," said Tina Teng, markets analyst at CMC Markets. China's annual parliament opens on Sunday and will implement the biggest government reshuffle in a decade, confirming Xi Jinping's new economic team. Stock markets in Southeast Asia were mixed, with stocks in Manila and Seoul climbing 1.1% and 0.9%, respectively, to lead gains. Equities in Jakarta rose 0.3%, while Singapore's benchmark index dropped 0.5%. Stocks in Bangkok were flat. HIGHLIGHTS: ** South Korea's factory activity shrunk for an eighth month in February ** India's 10-year benchmark yields down 2.2 bps at 7.456% The following table shows rates for Asian currencies against the dollar at 0346 GMT. COUNTRY FX RIC FX FX INDE STOCKS STOCKS DAILY % YTD % X DAILY YTD % % Japan -0.16 -3.86 <.N2 -0.08 5.36 25> China EC> India -0.08 +0.18 <.NS 0.00 -3.61 EI> Indonesi -0.26 +1.93 <.JK 0.34 0.26 a SE> Malaysia -0.07 -1.63 <.KL 0.14 -2.89 SE> Philippi -0.09 +1.16 <.PS 1.06 1.69 nes I> S.Korea 11> Singapor -0.24 -0.38 <.ST -0.50 -0.39 e I> Taiwan -0.16 +0.24 <.TW -0.05 10.28 II> Thailand -0.50 -0.82 <.SE 0.02 -2.90 TI> (Reporting by Upasana Singh in Bengaluru)