* Indonesia stocks swing sharply between positive and negative territory * 10-year Indonesia bond yields rise to highest since late-July * Graphic: Foreign flows into Asian stocks tmsnrt.rs/2ReJOMr By Nikhil Nainan Sept 11 (Reuters) - Indonesian shares swung wildly and the rupiah fell to its weakest since May on Friday as fresh COVID-19 restrictions in Jakarta laid bare recovery hopes, while broader Asia was mixed after falls in Wall Street overnight. After falling almost 3% early in the session, the Jakarta share market recovered some poise but was still on course for its worst week since March while the rupiah, by far the region's worst performer this year, lost nearly 1%. Despite Bank Indonesia intervening to protect the rupiah, which backs one of Asia's most popular bond markets for foreign investors, the currency has still dropped almost 2% in the two weeks since investors took fright at a parliamentary panel's recommendations for changes to the central bank law. 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 and the global fallout from the pandemic. "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." Ahead of the open, Bank Indonesia said again that it would intervene in the spot market to help stabilise the rupiah, a carry trade favourite for foreign investors, while the yield on 10-year bonds climbed 11 basis points to 7.014%, its highest since late July. The bank holds a policy meeting next Thursday. Other equity markets in emerging Asia were marginally lower, with South Korean stocks down the most, losing around 0.8%, taking a cue from the overnight selling of high-valued U.S. tech stocks. "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 broadly weaker dollar. Malaysia's ringgit advanced 0.2% after its central bank held rates on Thursday in what some economists saw as a sign it will hold off with further cuts this year. HIGHLIGHTS: ** Indonesian 10-year benchmark yields up 11.3 basis points to 7.014% ** In Jakarta: Top gainers include Pollux Properti Indonesia Tbk PT and Rig Tenders Indonesia Tbk PT; top losers was Acset Indonusa Tbk PT ** Malaysia's 10-year benchmark yield up 2.5 basis points at 2.712% Asia stock indexes and currencies at 0348 GMT COUNTRY FX RIC FX FX INDEX STOCKS STOCKS DAILY % YTD % DAILY % YTD % Japan -0.02 +2.32 0.30 -1.49 China -0.07 +1.82 -0.21 5.83 India +0.00 -2.82 0.00 -5.91 Indonesia -0.67 -6.97 0.75 -21.77 Malaysia +0.22 -1.54 0.59 -5.66 Philippines +0.12 +4.39 0.95 -23.76 S.Korea -0.33 -2.73 -0.78 8.19 Singapore +0.19 -1.67 -0.49 -23.05 Taiwan +0.81 +2.82 -0.47 5.30 Thailand +0.06 -4.38 0.33 -18.02 (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Simon Cameron-Moore)
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