* Indonesia stocks swing sharply through the session * 10-year Indonesia bond yields rise to highest since late-July * Graphic: Foreign flows into Asian stocks tmsnrt.rs/2ReJOMr * Goldman Sachs bullish on the rupee Sept 11 (Reuters) - Indonesia's stock and currency markets touched multi-month lows on Friday as fresh COVID-19 restrictions in Jakarta ate into hopes of an economic recovery, while overnight selling on Wall Street kept sentiment across Asia subdued. Jakarta's main index rose 2%, after dropping nearly 3% early in the day, but was still on course for a weekly fall of around 5% that would be its worst performance since March. The rupiah, the region's worst hit currency this year, slipped 0.4% and was heading for its biggest weekly loss in a month. Ahead of the open, Bank Indonesia said again it would intervene in the spot market to stabilise the rupiah, which backs one of Asia's most popular bond markets for foreign investors. Even with the spate of interventions in recent days, the currency has dropped 2% in the two weeks since investors were taken aback by a parliamentary panel's recommendations for changes to the central bank. Investors fear the proposed changes could reduce the central bank's independence at a time when the economy is struggling with rising COVID-19 cases with a fresh lockdown in Jakarta from Monday threatening to add further harm to its economy. "Foreign investors were already concerned about proposed changes to the central bank law that could erode Bank Indonesia's independence," said Khoon Goh, ANZ's head of Asia research. "Now with the capital heading into lockdown, Indonesia's economic recovery is in doubt and this will see further investor caution, likely leading to near-term outflows." Equity markets in the rest of emerging Asia found their footing late in the day as Shanghai shares rose, with Manila up 1% and stocks in Seoul erasing losses to trade flat. However, renewed selling of high-valued U.S. tech stocks overnight kept investors uneasy. "With risk sentiment edgy, investors are likely to remain on the sidelines heading into the weekend," said Edward Ng, an Asian fixed income portfolio manager at Nikko Asset Management in Singapore. Currencies were mostly higher against a weaker dollar. Malaysia's ringgit gained 0.2% after its central bank held rates on Thursday in what some economists saw as a sign it will hold off on further cuts this year. The Indian rupee was flat and stocks in Mumbai edged higher as Indo-China tensions looked to be de-escalating. The rupee is set to snap four straight weeks of gains, but Goldman Sachs, buoyed by large foreign inflows in August, said it is bullish on the currency, pointing to moves by the Reserve Bank of India to allow it to appreciate and an attractive carry trade volatility ratio. HIGHLIGHTS: ** Indonesian 10-year benchmark yields up 9.5 basis points to 6.996% ** Top gainers in Jakarta include Akbar Indo Makmur Stimec Tbk PT and Pollux Properti Indonesia Tbk PT ** Malaysia's 10-year benchmark yield up 2.5 basis points to 2.712% Asia stock indexes and currencies at 0706 GMT COUNTRY FX RIC FX FX INDEX STOCKS STOCKS DAILY % YTD % DAILY % YTD % Japan -0.03 +2.31 0.74 -1.06 China -0.04 +1.85 0.75 6.85 India -0.04 -2.86 0.11 -5.81 Indonesia -0.40 -6.72 2.19 -20.65 Malaysia +0.19 -1.56 0.13 -6.09 Philippines +0.04 +4.30 1.11 -23.64 S.Korea -0.17 -2.57 0.01 9.06 Singapore +0.23 -1.62 -0.37 -22.96 Taiwan +0.84 +2.85 -0.12 5.66 Thailand -0.03 -4.47 -0.03 -18.32 (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Patrick Graham and Amy Caren Daniel)
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