EMERGING MARKETS-Thai baht gains as traders focus on PM vote; China's yuan climbs

* Thai baht hits highest level since May 16 * Thailand to hold another PM vote next week Yuan is top gainer after China relaxes financing rule * Nikkei index climbs more 1% By Rishav Chatterjee July 20 (Reuters) - The Thai baht strengthened against an easing greenback on Thursday after signs of a premiership battle ending in Thailand improved investor sentiment, although equity markets in the region struggled for direction. China's yuan firmed to its highest in more than four months after the central bank eased its cross-border financing rule. China, the world's second-largest economy, remains in focus as investors eye further stimulus measures from Beijing to revive the economy while the central bank made efforts to stall their currency drag by raising a key ratio. The U.S. dollar index weakened 0.15% to 100.10, but regained some lost ground after a 2% slump last week. The Thai baht appreciated by 0.4% to trade at 34, at an over two-month high, as investors hoped for a resolution to the political uncertainty with the second-placed Pheu Thai party expected to field one of its candidates to form a government. After more than seven hours of debate on a challenge to Pita Limjaroenrat's candidacy before a parliamentary vote on Wednesday, lawmakers voided his nomination. "Market confidence is rising in Thailand after Pita signalled that the Pheu Thai party can field their candidate and that is raising hopes of a political resolution in the country," said Poon Panichpibool, markets strategist at Krung Thai Bank. The Thai baht, which had so far this year lagged its Asian peers, is now seen rebounding. The unit reversed course in the last three weeks to appreciate about 1.7% for the year. The yuan strengthened 0.6%, marking its biggest intraday gain since mid-March, after China beefed up its support for the currency with a stronger-than-expected reference rate and a change to its capital curbs to attract inflows. "The move underscores policymaker's determination to push back against yuan weakening, especially following the rather sharp move in recent days," said OCBC analysts. But clearly such a move is only a short-term pushback, and markets will chase USD/CNH higher again if disappointment over the absence of stimuli grows, they added. Equities in the region largely rose, with the benchmark indexes in Indonesia, Malaysia and the Philippines advancing between 0.3% and 1.5%, while those in India, Singapore and Thailand lost about 0.3% each. The Singapore dollar edged 0.1% higher, while Malaysia's ringgit and the Philippine peso depreciated around 0.2% each. HIGHLIGHTS: ** POLL-Bank Indonesia rates on hold for rest of year, cut in Q1 2024 ** Thai recovery intact, policy tightening will be gradual - cenbank chief ** China willing to deepen security cooperation with Thailand - Xinhua Asia stock indexes and currencies at 0630 GMT COUNTRY FX RIC FX FX INDE STOCK STOCKS DAILY YTD % X S YTD % % DAILY % Japan +0.09 -6.05 <.N2 1.23 24.51 25> China EC> India +0.06 +0.83 <.NS 0.04 9.59 EI> Indonesia +0.07 +3.91 <.JK 0.39 0.10 SE> Malaysia -0.24 -3.32 <.KL 0.28 -5.92 SE> Philippin -0.17 +2.24 <.PS 1.45 1.07 es I> S.Korea 11> Singapore +0.13 +1.25 <.ST 0.07 0.80 I> Taiwan -0.03 -1.17 <.TW 0.28 21.41 II> Thailand +0.44 +1.72 <.SE -0.27 -8.16 TI> (Reporting by Rishav Chatterjee in Bengaluru; Editing by Sherry Jacob-Phillips)