* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
* BNM seen holding rates, providing fiscal support
* Increase in virus cases in Asia to dent FX appeal - analyst
* Rupiah at seven-week high
By Anushka Trivedi
May 6 (Reuters) - Malaysian shares dropped 1% to a six-month low and the ringgit eased on Thursday after COVID-19 curbs were imposed in the capital Kuala Lumpur and as investors awaited the country's central bank rate decision due later in the day.
Other Asian stock markets including those of the Philippines .PSI , Indonesia .JKSE and Taiwan .TWII slid around 0.3%, as sentiment was soured by a drop in Chinese shares .SSEC which resumed trading after holidays this week.
Malaysia shares .KLSE slid and the ringgit fell 0.2% as Kuala Lumpur's two-week curbs added to lockdowns already in place in economically prosperous regions of the country amid a resurgence in coronavirus infections. Negara Malaysia (BNM) is set to meet for a policy review later in the day and is expected widely to keep the benchmark rate at a record low of 1.75% but take measures to offset the economic slump.
"After the extension of social restrictions into mid-May, there is little to suggest an urgent need for further rate cuts," Mizuho analysts wrote, expecting BNM to remain dovish for some time.
BNM may "defer to more targeted fiscal-healthcare coordination...provide liquidity and facilitate loan moratoriums or restructuring to ensure the pandemic does not set off a financial contagion."
Emerging market currencies slipped as the U.S. dollar USD= built on momentum stemming from a strong economic recovery and a lift in inflation raising chances of a rate hike. FRX/
The Chinese yuan CNY=CFXS , the Thai baht THB=TH , South Korean won KRW=KFTC and the Philippine peso PHP= all fell between 0.1% and 0.3%.
"We think U.S. Treasury 10-year yields will reach 2% by the end of the year...so in the near term, the U.S. dollar looks like its found a floor and that suggests Asian currencies will largely be on the back foot," said Mitul Kotecha, chief EM Asia & Europe strategist at TD Securities.
"The increase in virus cases across much of the region is also likely to dent support for Asian currencies," he added.
The Indonesian rupiah IDR= was an outlier, jumping 0.6% to a seven-week high a day after quarterly gross domestic product (GDP) data signalled that an economic recovery was afoot. Indonesian 10-year benchmark yields are down about 0.89 basis points at 6.468%
** India reported a record 412,262 new COVID-19 cases on Thursday and a record 3,980 daily death toll Asia stock indexes and currencies at 0425 GMT
FX DAILY % FX YTD %
INDEX STOCKS DAILY % STOCKS YTD % Japan
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