*

Taiwan, S.Korea and Singapore equities near record levels

*

MSCI EM Asia index gains for sixth day

*

Most regional indexes set for best weekly gains in months

*

Indonesia's 10-year bond yields slip to two-week low

(Updates for afternoon trade)

By Sameer Manekar and Roushni Nair

Sept 12 (Reuters) - Equities in Asian emerging markets

hovered near their lifetime highs and currencies advanced

against the dollar on Friday, as bets on aggressive U.S. rate

cuts drew investors into higher-yielding assets.

Equity benchmarks in Taiwan, South Korea,

and Singapore traded near their record levels on the day.

The MSCI index tracking EM Asia stocks rose for

the sixth consecutive day to touch a fresh four-year peak.

Most regional indexes were headed for their strongest weekly

gains in months, with the MSCI gauge marking its best weekly

performance in about a year.

Strengthening prospects of U.S. rate cuts have propped up

Asian stocks, as lower borrowing costs weaken the dollar and

draw more money into high-yielding emerging markets.

"We continue to believe that some areas in the ASEAN-4

markets are worth a look in light of a reduction in

tariffs-related uncertainty, resumption of Fed rate cuts,

investor under-positioning, attractive relative valuations and

lagging performance," said Chetan Seth, an equity strategist at

Nomura.

Markets continue to project a 100% chance of a Fed rate cut

next week, with some predicting an 8% probability of a more

aggressive half-point reduction.

Thursday's U.S. inflation data, seen as supportive of rate

cuts, prompted traders to price a 90% chance of two more moves

this year.

Indonesia's Jakarta Composite jumped more than 1% to

a four-session high, consolidating after the sudden departure of

the country's reputed finance minister earlier in the week

triggered massive foreign outflows.

Top banks in Indonesia, including Bank Central

Asia, Bank Rakyat, and Bank

Mandiri gained between 1% and 2% on the day, lifting

the benchmark index.

The rupiah also firmed to 16,388 a dollar, its

highest since Monday, and government bonds rallied, with the

10-year yield slipping to a two-week low of 6.322%.

The rally is "driven by more promising prospects on the

Indonesian economic outlook," wrote Myrdal Gunarto, a global

markets economist at Maybank Indonesia, citing liquidity

measures introduced by Indonesia's new finance minister and

strong investor bets of lower Fed rates.

The spread between Indonesia's 1- and 10-year bond yields

also narrowed to 114.4 basis points from a 32-month peak of

126.4 bps scaled earlier in the week, as investors returned to

long-tenor bonds.

In Singapore, the FTSE Straits Times index slipped a

shade but remained only a few points shy of its all-time highs.

Stocks in Malaysia and Thailand edged higher.

Currencies were largely on the front foot: Taiwan's dollar

firmed to a three-week high of 30.200 per dollar, and

the Thai baht and the Malaysian ringgit were a

touch firmer.

The MSCI gauge of global EM currencies

briefly scaled a seven-week high, and was poised for its best

weekly gain since early August.

HIGHLIGHTS:

** Yields on India's 10-year bonds slip to

6.463%

** DBS Group shares down 1.3%

** Alibaba ( BABA ) shares jump as much as 7.3% on report

of in-house chips for AI

Asia stock indexes and currencies at 0709 GMT

Japan -0.07 +6.71 0.89 12.22

China India +0.21 -3.00 0.46 6.24

Indones +0.52 -1.71 1.13 10.67

ia

Malaysi +0.45 +6.38 0.50 -3.14

a

Philipp -0.08 +1.68 -0.29 -6.43

ines

S.Korea Singapo +0.04 +6.61 -0.16 14.82

re

Taiwan +0.46 +8.53 1.03 10.59

Thailan +0.32 +8.34 0.30 -7.74

d