 ANZResearch By Rashmi Ashok July 1 Reuters - The Indonesian rupiah eased on Wednesdayas prospects of a rate cut increased after inflation came inbelow the central banks target range, while broader Asianstocks struggled to retain gains as rising coronavirus cases inthe United States weighed. The rupiah fell 0.5 and was set for itsfifth-consecutive drop. Data showed Indonesias inflation rateslowed further in June to 1.96, just below the central bankstarget range of 2 to 4, fuelling expectations of more easing. Weak price pressures support the case for a further ratecut by Bank Indonesia in the third quarter, but the timing willalso be dependent on rupiah stability, analysts at ANZ Researchwrote. They added they expect a 25 basis point cut, which ifoccurs, will be the fourth this year. The currency is already under pressure after the centralbank on Monday agreed to buy low-yielding bonds, including thosewith zero yield, to help the government finance a bloated fiscaldeficit. Bank Indonesias purchases may stabilise the bond market,but may undermine its main policy goal of rupiah stability ifdebt monetization risks take hold or credit rating riskssurface, analysts at Mizuho wrote in a note. The Philippine peso slipped 0.2, in part from asurprise 50 basis point rate cut last week that sappedappreciation in the currency and sent 10-year bonds yields diving half a percentage point at the start of theweek to 2.8. Still, a bond auction on Monday was oversubscribed,indicating investor willingness to buy the countrys relativelyhigher yielding bonds despite the rate cut. Elsewhere, Asian stocks struggled to make headway as thebiggest one-day surge in coronavirus cases in the United Statessince the start of the pandemic dented an initial boost fromdata showing Chinas factory activity grew at a faster pace inJune. Adding to concerns, the first arrest was made in Hong Kongunder Chinas sweeping national security law aimed at increasingits control on the financial hub. Singapores stocks traded 0.7 higher while SouthKorean shares turned negative, after gaining over 1earlier. Indonesian stocks also slipped. Chinese stocks were the top performers, adding about1.4. HIGHLIGHTS: Malaysias 10-year benchmark yield fell 0.8 basis pointsto 3.049, while 3-year benchmark yield eased 1.2 basis pointsto 2.254 Top losers on the Jakarta stock index includedYanaprima Hastapersada Tbk PT, down 7, and IndonesiaPondasi Raya Tbk PT, which was 6.9 lower Top gainers on the Singapore STI included SembcorpIndustries Ltd up 4 and SATS Ltd at 2.1higher Asia stock indexes and currencies at 0722 GMT COUNTRY FX RIC FX FX YTD INDEX STOCKS STOCKS DAILY DAILY YTD Japan 0.27 0.91 -0.75 -6.49 China India -0.10 -5.55 0.93 -14.55 Indones -0.49 -2.60 -0.25 -22.33 ia Malaysi 0.00 -4.51 0.52 -5.03 a Philipp -0.18 1.64 0.03 -20.54 ines S.Korea Singapo -0.01 -3.50 0.64 -19.12 re Taiwan 0.56 2.07 0.71 -2.45 Thailan -0.19 -3.36 -0.12 -15.34 d Reporting by Rashmi Ashok in Bengaluru; Editing by Sriraj Kalluvila 