SE Asia Stocks-Most fall; Vietnam extends fall to third day

* Philippine cenbank hikes interest rate after market hours

* Markets in Malaysia, Indonesia closed

By Karthika Suresh Namboothiri

May 10 (Reuters) - Most Southeast Asian stock markets fell

on Thursday, with Vietnam sliding 2.7 percent weighed

down by lenders, while Philippines shares ended

marginally higher after data showed first-quarter economic

growth was in line with expectations.

The Philippines economy grew 6.8 percent in the first

quarter, matching expectations and supporting optimism the

government is on track to meet its growth target.

After market hours, the Philippine central bank raised

benchmark interest rate which has remained unchanged in over

three years.

"Philippines now has (by far) the steepest 2-year/10-year

spread in emerging Asia. With inflation accelerating, tightening

policy now could allay overheating concerns," DBS Group Research

said in a note.

The Bangko Sentral ng Pilipinas (BSP) raised the key

interest rate by 25 basis points to 3.25 percent after market

close on Thursday.

The Philippine index ended 0.2 percent higher led by lenders

such as BDO Unibank Inc, up 2.1 percent and

Metropolitan Bank & Trust's, up 2.6 percent.

Vietnamese stocks extended losses for a third

session, with financials leading the decline.

Vietcombank fell 5 percent and Bank for Investment

and Development of Vietnam shed 7 percent.

Markets in Malaysia were closed for special public holidays,

following a stunning defeat of the incumbent Prime Minister

Najib Razak by the Pakatan Harapan party led by former mentor

Mahathir Mohamad.

A fall in the Malaysian ringgit in offshore trading and a

rise in the cost of insuring the country's debt showed evidence

of apprehension among investors.

The central bank, however, proceeded with a policy meeting

and kept its key interest rate unchanged.

Mizuho Bank said the holidays were "buying time for Pakatan

Harapan lawmakers to reassure investors that any change would be

gradual and carefully managed".

The country's national stock exchange, Bursa Malaysia, said

trading would resume on Monday.

Indonesian markets were closed for a local holiday.

The central bank had said on Wednesday it may raise its

benchmark interest rate in a move to support the rupiah

which has been wallowing at 2-1/2 year lows.

Bank Indonesia, which has held the interest rate steady

since cutting it by 25 basis points in September, will hold its

monthly policy meeting next week.

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SOUTHEAST ASIAN STOCK MARKETS

Change on the day

Market Current Previous close Pct Move

Singapore 3537.59 3548.54 -0.31

Bangkok 1746.89 1756.9 -0.57

Manila 7571 7555.27 0.21

Ho Chi Minh 1028.87 1056.97 -2.66

Change on year

Market Current End 2017 Pct Move

Singapore 3537.59 3402.92 3.96

Bangkok 1746.89 1753.71 -0.39

Manila 7571 8558.42 -11.54

Ho Chi Minh 1028.87 984.24 4.53

(Reporting by Karthika Suresh Namboothiri; Editing by Vyas

Mohan)