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EMERGING MARKETS-Malaysian shares drop as deadline to form government looms

* Most Asian FX edges higher * Ringgit flat ahead of palace-set deadline to form govt * Regional stock indexes mixed By Himanshi Akhand Nov 22 (Reuters) - Malaysian stocks weakened for the second day and the ringgit traded flat on Tuesday as two major coalitions scrambled to meet the deadline to form a government, while most other emerging Asian currencies bounced back from Monday's losses. Stocks in Kuala Lumpur fell 0.8% ahead of a 0600 GMT deadline for parties to put together alliances needed for a majority as they vied to break a deadlock, three days after the election resulted in an unprecedented hung parliament. The stalemate risks delaying policy decisions and complicating potential fiscal repair, with the world's second-biggest palm oil producer vulnerable to shifts in commodity prices and manufacturing competition from regional rivals. "The situation remained fluid and from the market's perspective, any government might be better than having no government... even as there is some cautiousness when it comes to having the religion-based PAS in the ruling federal government," analysts at OCBC Bank wrote. Shares of casino operator Genting Malaysia and investment holding and management company Genting Berhad have slipped this week as investors worried that the strong performance from the Islamist party PAS could lead to a crackdown on gambling. Other regional currencies edged higher as the U.S. dollar pared some of its overnight gains, even as China's COVID-19 cases rose further. The South Korean won, Singaporean dollar, and Thailand's baht added between 0.1% and 0.3%. The Philippine peso also gained 0.2%, and equities in Manila firmed 0.8%. Central bank Bangko Sentral ng Pilipinas (BSP) on Tuesday reiterated that it would adjust policy rates in December to keep up with an expected 50-basis-point rate hike by the U.S. Federal Reserve. BSP raised rates by 75 basis points last week. "The peso has been under pressure... so there's a pressure on the BSP to maintain or to keep up with the Fed," said Wei Liang Chang, FX and credit strategist at DBS Bank. "There could be some influence (from the BSP) in terms of trying to stabilize the exchange rate for (the) peso." Major regional stock indexes were mixed. Equities in Singapore gained 0.5%. Thailand's stocks rose 0.2% in their third consecutive session of gains, while South Korean equities dropped 0.4%. HIGHLIGHTS ** Malaysia's 10-year benchmark yield is down 0.3 basis points at 4.398% ** Top losers on FTSE Bursa Malaysia Kl Index include Top Glove Corporation Bhd and Maxis Bhd ** Top gainers on the Singapore STI include Sembcorp Industries Ltd and Yangzijiang Shipbuilding Holdings Ltd Asia stock indexes and currencies at 0402 GMT COUNTRY FX RIC FX FX INDE STOCKS STOCKS DAILY % YTD % X DAILY YTD % % Japan +0.26 -18.8 <.N2 0.66 -2.30 1 25> China 5 EC> India +0.18 -9.01 <.NS -0.02 4.62 EI> Indonesi +0.00 -9.29 <.JK 0.00 7.32 a SE> Malaysia +0.02 -8.96 <.KL -0.67 -8.25 SE> Philippi +0.14 -11.0 <.PS 0.85 -9.33 nes 4 I> S.Korea 4 11> Singapor +0.12 -2.25 <.ST 0.51 4.59 e I> Taiwan +0.13 -11.1 <.TW 0.62 -20.20 6 II> Thailand +0.30 -7.67 <.SE 0.18 -2.16 TI> (Reporting by Himanshi Akhand in Bengaluru; Editing by Ana Nicolaci da Costa)