* Malaysian ringgit set for worst day since early Nov
* South Korean shares down nearly 2%
* Thailand inflation data awaited

By John Biju
       Jan 3 (Reuters) - Most Asian currencies and equities
lost ground in a broad sell-off on Wednesday as optimism about
imminent rate cuts faded ahead of the Federal Reserve's December
meeting minutes later in the day and investors cut positions in
riskier Asian assets. 
    MSCI's emerging market currency index, which
 posted its steepest one-day drop since February 2023 on
Tuesday, was down 0.2%. The South Korean won slid
0.8%, while the Malaysian ringgit retreated 0.7% heading
for its worst day since early November. 
    Asian currencies and equities were rallying near the end of
the 2023, after an unexpectedly dovish shift from the U.S.
Federal Reserve fuelled bets that the rate hiking cycle was over
with markets starting to anticipate rate cuts as early as March.
    "I think the market is probably turning a bit more cautious
over the Fed rate cut pricing given that some of this could have
been overdone," Moh Siong Sim, FX strategist at Bank of
Singapore said. 
    Asian currencies have benefited from rate cuts expectations
but as rate cuts pricing looks overdone and markets reassess the
situation, the rate cuts pricing might support the dollar and
work against Asian currencies, he added. 
    The U.S. dollar was hovering near a two-week high
against its major peers on Wednesday while U.S. Treasury yields
 popped to two-week highs overnight. 
    Consequently, regional equities dropped, with those in South
Korea falling nearly 2%, after hitting a 19-month high
on Tuesday. Taiwanese stocks slid 1.8% while stocks in
Singapore retreated 0.6%. 
    Markets now await the minutes of the Federal Reserve's last
policy meeting due later in the day for further clues on rate
cuts this year.   
    Inflation data from Thailand due on Thursday and from the
Philippines on Friday are also on investor's radar. Recent data
have shown an easing trend in inflation in Asian countries with
annual inflation in Indonesia cooling more than expected in
December. 
    The Indonesian rupiah was largely unchanged while
equities were down 0.3%. 
    Although inflation has been cooling in most Asian countries,
most Asian central banks are still on the restrictive side of 
monetary policy setting with the Philippine central bank stating
last month that policy would have to stay "sufficiently tight"
to bring inflation back to target. 
    "Asian central banks are likely not in a rush to cut rates
and won't be ahead of the Fed in cutting," Alex Loo, macro
strategist at TD Securities said. 
    However, we suspect there is a gradual shift in tone after
the Fed's pivot in December with Asian central banks such as the
Bank of Korea dialling back their hawkish tone, he added. 
    
    HIGHLIGHTS:    
    ** Indonesian 10-year benchmark yields rise 7
basis points to 6.592%
    ** China lifts policy bank loans, raising housing support
expectations
    ** Indonesia books smallest fiscal deficit in 12 years in
2023
    
    
  Asia stock indexes and                             
 currencies at 0350 GMT                         
 COUNTRY  FX RIC        FX     FX  INDE  STOCK  STOCK
                     DAILY  YTD %     X      S  S YTD
                         %               DAILY      %
                                             %  
 Japan               +0.05  -0.60  <.N2    -      -
                                   25>          
 China                           EC>          
 India               +0.03  -0.10  <.NS   0.00  -0.30
                                   EI>          
 Indones             -0.13  -0.58  <.JK  -0.30   0.40
 ia                                SE>          
 Malaysi             -0.69  -0.91  <.KL  -0.10  -0.21
 a                                 SE>          
 Philipp             -0.18  -0.56  <.PS  -0.20   1.41
 ines                              I>           
 S.Korea                         11>          
 Singapo             -0.01  -0.54  <.ST  -0.62  -0.94
 re                                I>           
 Taiwan              -0.44  -0.86  <.TW  -1.75  -2.18
                                   II>          
 Thailan             +0.06  -0.22  <.SE   0.17   1.41
 d                                 TI>          
 
    
    

    
 (Reporting by John Biju in Bengaluru; Editing by Christian
Schmollinger)