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Ringgit dips 0.2%, Malaysian stocks off nearly 0.8%
Emergency request rejection spares economic crisis - Mizuho
Taiwan dollar at two-week high, up 1.1%
Oct 26 (Reuters) - Malaysian stocks stumbled on Monday as political uncertainty in the Southeast Asian nation grew after the king rejected a request by the prime minister to declare a state of emergency in response to the coronavirus crisis.
Broader Asian stocks and currencies were subdued, as a surge in coronavirus cases in the United States and Europe threatened hopes for a global economic recovery, adding to uncertainty posed by the looming U.S. presidential election.
Malaysian King Al-Sultan Abdullah's rejection on Sunday of the request for the emergency on Sunday is a major setback for Prime Minister Muhyiddin Yassin, who is facing a leadership challenge from an opposition leader and infighting within his ruling coalition.
The king's rejection has arguably spared the country a deeper political and consequent economic crisis, analysts at Mizuho wrote, noting that the emergency request could be construed as a backdoor for the prime minister to retain control.
"The real danger is that a state of emergency, if construed as an undemocratic tool to out-manoeuvre, will inadvertently exacerbate the PM's political woes, potentially plunging Malaysia into deeper political uncertainty." The ringgit MYR= shed more than 0.2% against the dollar to stand at a near four-week low, extending losses of around 0.3% sustained on Friday after talk of the state of emergency request first surfaced.
The Malaysian stock index .KLSE slipped 0.8% to its lowest since Sept. 11, with glove maker Top Glove Corp TPGC.KL the biggest loser, down 2.5%.
Malaysia has seen a resurgence in coronavirus cases recently, just as businesses and workers try to recover from the economic blow of pandemic-led lockdowns.
Thai shares .SETI struggled to hold on to gains and the baht THB=TH dipped slightly after a holiday-extended weekend, as protests demanding the resignation of Prime Minister Prayuth Chan-ocha continued.
Shares had recovered slightly on Thursday after an emergency decree aimed at ending months of protests against Chan-ocha's government and the monarchy was revoked, after it brought tens of thousands of people on to Bangkok's streets.
Taiwan's dollar TWD=TP was among the most sought after currencies in the session, gaining more than 1.1% to touch a two-week high.
The currency is the region's top performer so far this year with a 5.2% gain, as the work-from-home shift fuelled demand for the country's key chip and semiconductor exports, offering a buffer to the economic blow from the pandemic.
** Top gainers on the Jakarta stock index .JKSE include Provident Agro Tbk PT PALM.JK, up 21.94%, and Sky Energy Indonesia Tbk PT JSKY.JK, up 20.69%
** In the Philippines, top index gainers were DMCI Holdings Inc DMC.PS, up 3.29%, and Puregold Price Club Inc PGOLD.PS, up 2.82%
** Indonesian 10-year benchmark yields fell 1.8 basis points to 6.6%, while 3-year benchmark yields eased 3.2 basis points to 5.23%
Asia stock indexes and currencies at 0448 GMT
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(Reporting by Rashmi Ashok in Bengaluru; Editing by Muralikumar Anantharaman)
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