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EMERGING MARKETS-Philippine peso, Indonesian rupiah defensive as stocks rally

(Repeats.) * Graphic: World FX rates http://tmsnrt.rs/2egbfVh * Graphic: Foreign flows into Asian stocks https://tmsnrt.rs/3f2vwbA * Indonesian rupiah down for fifth session, up 13% in Q2 * Philippine peso depreciates in wake of falling yields By Rashmi Ashok July 1 (Reuters) - The Philippine peso and Indonesian rupiah underperformed Asian peers on Wednesday as falling local yields and pressure on the currencies from rate cuts dented their appeal, keeping them from enjoying broader gains fuelled by upbeat Chinese data. The peso eased 0.2% against the dollar, while stocks in the country slipped 1% and were on course for a third-straight week of losses. Philippine 10-year bonds saw yields dive half a percentage point at the start of the week to 2.8% and have clung to similar levels since, after the central bank unexpectedly cut interest rates by 50 basis points to a new low last week. While the rate cut - the fourth this year - sapped gains in the peso, demand for Philippines' bonds was still unaffected, with a fresh auction on Monday being oversubscribed. "Investors must come to terms with the lower yields in their global hunt, keeping in mind that such an environment is supportive of the fiscal financing needed to tackle the economic effects of COVID-19," said Han Tan, market analyst at FXTM. "Despite the recent yield drop, the Philippines still offers higher yields compared to South Korea, Thailand, and Taiwan on the 10-year benchmarks." In Indonesia, inflationary concerns lingered after the government on Monday said Bank Indonesia (BI) would buy low yielding bonds, including those with zero yield, to finance a ballooning fiscal deficit caused by spending to fight the pandemic. The rupiah fell 0.5%, declining for the fifth-straight session. Still, the currency was the top gainer in the region in the second quarter of 2020 by a wide margin, appreciating 13%. Bank Indonesia's purchases may stabilise the bond market, but may undermine its main policy goal of rupiah stability if debt monetization risks take hold or credit rating risks surface, analysts at Mizuho wrote in a note. Elsewhere, Asian equities clocked modest gains, finding support from a private survey that showed China's factory activity grew at a faster clip in June after the government lifted coronavirus lockdown measures. A positive session on Wall Street overnight and a survey showing U.S. consumer confidence rebounded in June as businesses reopened also helped, with Singapore, Taiwan and South Korean stocks adding around 1% each. HIGHLIGHTS: ** Singapore STI's top gainers included SATS and Venture Corp up 2.1% each. ** Top gainers on the Thailand's SETI include Thai OPP up 14.8% and Asia Precision rising 13.2% ** Thailand's 10-year government bond yields were up 5 basis points at 1.27%​​ while 3-year yields rose 2 basis points to 0.6%​​. Asia stock indexes and currencies at 0336 GMT COUNTRY FX RIC FX FX YTD INDEX STOCKS STOCKS DAILY % DAILY YTD % % % Japan +0.19 +0.83 -0.19 -5.96 China <CNY=CFX +0.01 -1.43 0.83 -1.34 S> India +0.00 -5.46 0.00 -15.34 Indones -0.49 -2.60 -0.24 -22.32 ia Malaysi +0.07 -4.44 0.03 -5.49 a Philipp -0.19 +1.64 -0.80 -21.21 ines S.Korea <KRW=KFT +0.10 -3.78 0.79 -3.31 C> Singapo -0.01 -3.51 0.74 -19.04 re Taiwan +0.67 +2.18 0.85 -2.31 Thailan -0.13 -3.30 0.53 -14.80 d (Reporting by Rashmi Ashok in Bengaluru Editing by Vidya Ranganathan and Sam Holmes)