EMERGING MARKETS-Indonesian stocks head for worst week since June on new rule

By Shruti Agarwal

Oct 2 (Reuters) - Indonesian stocks were headed for their worst week in over three months on Friday, weighed down by a new exchange rule, while regional currencies were set for weekly losses as rising US yields and a strong dollar kept investors cautious.

Stocks in Jakarta .JKSE have dropped more than 4% so far this week, on track for their worst week since late June, after a new exchange rule took effect on Monday, cutting the minimum share price to 1 rupiah from 50.

The change lets stocks that were stuck at the old floor trade lower, with several stocks seeing multiple daily declines close to the exchange's 15% maximum fall limit.

GoTo Gojek Tokopedia GOTO.JK has shed 44% so far this week.

The equity index is the region's worst performer so far this year, down more than 30%, after MSCI's downgrade warning in January over opaque ownership, weak free float visibility, and unreliable trading data set off a selloff.

On the day, stocks fell 0.3%.

Regional currencies ticked higher on Friday as traders pared expectations of further Federal Reserve tightening, although a stronger dollar and rising US Treasury yields left most currencies set for weekly losses.

The Thai baht fell 0.8% for the week, on track for its fourth straight weekly loss. High oil prices have kept Thailand's import bill up, while rising yields have supported the dollar.

The Malaysian ringgit and the Singapore dollar also traded in the red for the week, while all three currencies stayed flat on the day.

The broader mood remained cautious as bond markets were again the centre of volatility: the benchmark U.S. 10-year Treasury yield hit its highest since 2002 overnight, after posting its strongest quarterly rise in 32 years.

Even so, emerging Asian government bonds outperformed developed-market peers in September, with yields across most of the region rising far less than in the United States and Europe.

The U.S. 10-year Treasury yield rose about 53.5 basis points (bps) over the month, while 10-year benchmark yields in Germany and France rose 25.49 bps and 68.75 bps, respectively.

By comparison, yields in South Korea, Taiwan, Singapore, Indonesia, and Malaysia rose only between 7 and 16 basis points.

"Many Asian economies entered this period with relatively stable inflation and stronger external positions," Leong said.

He added that Asian central banks moved relatively early during the global inflation shock, which helped anchor inflation expectations. That, along with larger foreign exchange buffers and more resilient external balances, helped local bond markets better absorb higher global yields.

On the day, Asian shares traded mixed, with stocks in Thailand .SETI, Malaysia .KLSE and the Philippines .PSI rising about 0.7%, 0.3% and 0.2%, respectively.

HIGHLIGHTS:

** GCash parent Mynt prices $845 million IPO, set to bolster Philippine share market

** Tokyo core inflation rate jumps in September, bolsters case for more BOJ hikes