EMERGING MARKETS-Asian stocks decline on China worries, currencies edge higher

* Seoul stocks fall 1.8%, Singapore shares down 0.7% * Most regional currencies reverse course to edge higher By Himanshi Akhand Aug 16 (Reuters) - Most Asian stock markets fell on Wednesday as expectations of higher-for-longer interest rates in the United States firmed and investors fretted over more disappointing economic data from China, while most currencies reversed course to trade higher. Stocks in Singapore, Jakarta and Seoul fell between 0.7% and 1.8%. Data showed that U.S. retail sales surpassed expectations in July, underscoring the country's economic resilience and strengthening the case for the Federal Reserve to keep rates higher for longer. Meanwhile, data showed that China's new home prices fell for the first time this year in July as piecemeal policy support failed to shore up the embattled property sector, fuelling worries about a longer-lasting slowdown in growth. The data came a day after Beijing cut key policy rates in the latest sign that authorities are ramping up efforts to boost the faltering economy. Due to the divergent monetary policy paths of the world's top two economies, the yield gap has widened to 164 basis points between China's benchmark 10-year government bonds and U.S Treasuries - the widest level since February 2007. "The market is struggling to price the divergence between U.S. economic strength versus EM weakness, especially China," analysts at DBS wrote in a note. Thailand's baht edged 0.1% higher after declining as much as 0.4% earlier in the session to hit its lowest level since June 30. Minutes of the Bank of Thailand's Aug. 2 monetary policy meeting, when the central bank increased the one-day repurchase rate by a quarter point, said the Thai economy should continue to expand as the policy rate is approaching a level consistent with long-term stability. Meanwhile, Thailand's Constitutional Court rejected a request from the election winning Move Forward Party to review a parliamentary decision that blocked its prime ministerial candidate from being re-nominated. The move paves the way for the legislature to hold another vote on a prime minister as soon as this week. A caretaker government has held the reins in Thailand for five months due to the prolonged deadlock following an election in which the Move Forward party won most seats. Poon Panichpibool, a market strategist with Krung Thai Bank, suggested that the baht could weaken further but at a gradual pace as there is still some dollar-selling interest from exporters. "Once we finally have the new government, it is possible that the baht could regain some strength and could gradually rise toward the 34 zone in the third quarter and 32-33 zone in the fourth quarter," Panichpibool said. The Philippine peso and the Indonesian rupiah added 0.1% and 0.3%, respectively. The Singapore dollar, which eased as much as 0.1% earlier in the session to touch its lowest since Dec. 16, was last up 0.1%. "We turn our eyes to FOMC (Federal Open Market Committee) minutes tonight for clues on the Fed's leanings. Unexpected hawkishness could well drive the dollar stronger, although we would expect a continued emphasis on data dependence," analysts at Maybank wrote. HIGHLIGHTS ** Malaysia's economic growth likely slowed to its weakest in nearly two years in the second quarter on an annual basis, a Reuters poll found ** Foreign holdings in China's onshore yuan bonds declined in July, official data showed ** South Korea's exports are seen swinging back to growth starting from October in a slower recovery than the government had expected, the country's finance minister said Asia stock indexes and currencies at 0708 GMT COUNTRY FX RIC FX FX INDE STOCKS STOCKS DAILY % YTD % X DAILY YTD % % Japan +0.13 -9.82 <.N2 -1.46 21.74 25> China EC> India - -0.28 <.NS -0.23 7.10 EI> Indonesi +0.33 +1.83 <.JK -0.60 0.33 a SE> Malaysia +0.02 -5.01 <.KL 0.03 -2.33 SE> Philippi +0.08 -1.83 <.PS 1.17 -2.38 nes I> S.Korea 11> Singapor +0.08 -1.27 <.ST -0.68 -1.25 e I> Taiwan +0.16 -3.69 <.TW -0.05 16.33 II> Thailand +0.07 -2.11 <.SE -0.74 -9.54 TI> (Reporting by Himanshi Akhand in Bengaluru; Editing by Subhranshu Sahu)