* China swings in deflation in July
* Philippine peso leads gains
* Equities in South Korea top gainer

By Navya Mittal
       Aug 9 (Reuters) - Philippine peso led gains as Asian
currencies edged higher on Wednesday, despite China's consumer
prices falling in July, making it the first G20 economy to enter
deflation territory since Japan in 2021.
        The Chinese yuan strengthened 0.2% as major
state-owned banks were seen selling dollars to slow the pace of
the yuan's decline, while stocks slipped 0.4%.
    The weak inflation data from China fuelled concern over the
outlook for global growth, and should add to pressure on
authorities in Beijing to do more to stimulate demand in the
world's second-largest economy.
    Analysts at Goldman Sachs expect deflation in producer
prices to persist in coming months, while also expecting a
"U-shaped recovery" for consumer prices.    
    "A gradually closing output gap is likely to bring headline
CPI inflation back to its 2% long-term historical trend by the
end of 2024," they said in a note.
    The Philippine peso gained 0.2%, while Indonesia's
rupiah and Malaysia's ringgit appreciated
slightly.
    Stocks in the region traded higher, with South Korea
and Malaysia leading the gains, as their benchmarks rose
over 1% and 0.4% respectively. 
    Shares in Manila edged slightly higher. The country's
agricultural and fisheries production by value narrowed 1.3% in
the second quarter ahead of Thursday's economic report. 
    In Thailand, the central bank chief said economic growth
forecasts may need to be revised down, as the recovery may not
be as strong as expected earlier, and interest rates may be
raised or held steady at the next policy review.
    Shares in Manila edged slightly higher. The country's
agricultural and fisheries production by value shrank 1.3% in
the second quarter from a year earlier. The Philippines releases
second quarter gross domestic product data on Thursday.
    The U.S. dollar index, which measures the greenback
against six major peers, edged lower by 0.068 to 102.45 as of
0346 GMT. 
    Concerns about U.S. banks added to the risk-averse
sentiment, after Moody's cut credit ratings of several small to
mid-sized U.S. banks and said it may downgrade some of the
nation's biggest lenders, including Bank of New York Mellon and
US Bancorp.
   
    HIGHLIGHTS
    ** China, Philippines' dispute over grounded warship heats
up
    ** South Korea unemployment rate climbs to six-month high -
Reuters

  Asia stock indexes and                            
 currencies at 0421 GMT                        
 COUNTRY  FX RIC        FX    FX  INDE  STOCK  STOCK
                     DAILY   YTD     X      S  S YTD
                         %     %        DAILY      %
                                            %  
 Japan               +0.12  -8.4  <.N2  -0.54  25.22
                               4  25>          
 China                       8  EC>          
 India               +0.02  -0.1  <.NS  -0.29   7.78
                               1  EI>          
 Indones             +0.07  +2.3  <.JK   0.32   0.59
 ia                            7  SE>          
 Malaysi             +0.04  -3.8  <.KL   0.42  -2.57
 a                             9  SE>          
 Philipp             +0.20  -1.1  <.PS   0.09  -1.33
 ines                          5  I>           
 S.Korea                     3  11>          
 Singapo             +0.10  -0.4  <.ST      -   1.92
 re                            6  I>           
 Taiwan              -0.01  -3.4  <.TW  -0.17  19.17
                               7  II>          
 Thailan             +0.11  -1.0  <.SE   0.30  -8.73
 d                             7  TI>          
 

    
 (Reporting by Navya Mittal in Bengaluru; Editing by Simon
Cameron-Moore)