* China state banks seen buying USD to ease yuan rally - traders * Taiwan finds fist case of new coronavirus variant * Sime Darby shares weigh on Malaysian benchmark By Pranav A K and Anushka Trivedi Dec 31 (Reuters) - Asian currencies were on course to finish the pandemic-hit year on a positive note, with the Malaysian ringgit leading gains on Thursday as broader sentiment was lifted by hopes of a vaccine-led economic recovery. The Chinese yuan, however, held back as traders suspected state-owned banks were buying dollars to curb the currency from rising too fast and breaching a key level of 6.5 per dollar. The yuan has risen rapidly since May and is set to mark its first annual gain in three as a weaker dollar, the widening yield gap between China and the United States and Beijing"s effective coronavirus containment underpinned gains in the currency. Other emerging currencies in the region were broadly firmer after the dollar weakened as investors continued to bet that COVID-19 vaccine rollouts will help the economy towards a more sustainable recovery. "A smooth vaccine rollout can be a game-changer," said Christopher Wong, a senior foreign exchange strategist at Maybank "Global economy could be closer to a more sustainable recovery trajectory amid unprecedented fiscal and monetary support." China"s outperformance has also helped regional units, with the Taiwanese dollar on course to be the best performer in Asia this year as it firmed as much as 1.5% to take annual gains to about 7%. Investors have lauded the island"s handling of the pandemic, while a global shift to working remotely boosted demand for its tech products. Malaysian ringgit strengthened 0.6% on Thursday, while Singapore dollar also gained some ground. Emerging Asia"s currencies stand to benefit from a recovery in economic growth next year, with trade-linked Taiwan dollar, Singapore dollar, won and yuan appearing as winners, whereas low interest-rate and inflation environment should support the region"s carry trade favourites, Wong said. A slump in shares of Sime Darby Plantation knocked Malaysian stock index sharply lower after the United States banned imports of palm oil from the producer over allegations of forced labour. Stock markets in the Philippines, Indonesia, Thailand, Japan and South Korea were closed for a holiday. HIGHLIGHTS: ** Singapore GDP to extend decline in Q4 - Reuters poll ** Top losers on FTSE Bursa Malaysia Kl Index include Sime Darby Plantation Bhd, down 3.29%, and Press Metal Aluminium Holdings Bhd, down 1.88% ** Singapore"s 10-year benchmark yield is down 1.7 basis points at 0.839% Asia stock indexes and currencies at 0458 GMT COUNTRY FX RIC FX DAILY % FX YTD INDEX STOCKS DAILY % STOCKS YTD % % Japan +0.02 +5.29 0.00 16.01 China -0.08 +6.63 0.83 12.87 India +0.30 -2.33 0.04 14.95 Malaysia +0.62 +1.97 -0.55 2.93 Philippines +0.00 +5.50 0.00 -8.64 Singapore +0.01 +1.63 -0.89 -11.76 Taiwan +0.00 +5.61 0.16 22.63 (Reporting by A K Pranav and Anushka Trivedi in Bengaluru; Editing by Anil D"Silva)