* Indonesia 10-year bond yields drop, rupiah at 6-mth high * Rupiah may continue to outperform - analyst * Thai shares fall 1% on virus curbs threat By Anushka Trivedi Jan 4 (Reuters) - Emerging Asia"s currencies began the new year on the front foot as investors bet that a vaccine-led recovery from the COVID-19 pandemic would keep the dollar subdued, with the Indonesian rupiah climbing to a more than six-month high. The greenback continued to retreat after posting its largest annual loss since 2017 last year, buoying the Taiwanese dollar 1.5%, while the Malaysian ringgit and the South Korean won advanced 0.6% and 0.5%, respectively. The Chinese yuan jumped 0.9% and blew past the crucial 6.5 per dollar level, anchoring gains in regional currencies. "The weaker U.S. dollar is set to be a prolonged theme in 2021," said Han Tan, market analyst at FXTM, adding that emerging-market currencies would stay supported in that case, with optimism over vaccine rollouts adding to gains. "Any ramp up in expectations for more incoming U.S. fiscal stimulus or other boosts to inflationary pressures should translate into more downward pressure on the dollar," he said. Meanwhile, the rupiah broke the 14,000 per dollar mark on Monday, trading 1.3% higher at about 13,860, whereas Indonesia"s 10-year benchmark yields fell 16.1 basis points at 5.937%. Yields fall when prices rise. After concerns over the central bank"s autonomy in Jakarta, positive vaccine developments toward the end of 2020 helped the rupiah recoup most of its losses, with investors continuing to flock to Indonesia"s high-yielding debt amid a weak dollar. "The rupiah may continue its outperformance... the global hunt for yields should drive more inflows into its bond markets which would be a major supportive element for the Indonesian currency," Tan added. Most regional equities were stronger amid optimism in markets, with South Korea, Indonesia and the Philippines shares firming between 1% to 2.3%. However, the Malaysian bourse was weighed down by the heavyweight glove makers that benefited during the early months of the pandemic. Thai shares dropped 1% as the government mulled more restrictions amid a second wave of coronavirus infections and after it reported its first known case of a more contagious variant of the virus on Sunday. HIGHLIGHTS ** The Singapore dollar notches a near 3-year high after Q4 GDP contracts slightly less than expected ** Top losers on Malaysia Index are glove makers Hartalega Holdings Bhd down 13.7%, Top Glove Corp down 10.5% & Supermax Corp down 6.7% ** Top gainers on the Jakarta stock index: Trust Finance Indonesia Tbk PT up 18.4% and Energi Mega Persada Tbk PT up 13.2% Asia stock indexes and currencies at 0510 GMT COUNTRY FX RIC FX DAILY % FX YTD % INDEX STOCKS DAILY % STOCKS YTD % Japan +0.17 +0.21 -0.67 -0.67 China +0.89 +0.89 0.91 0.91 India +0.24 +0.16 0.48 0.74 Indonesia +1.26 +1.26 1.00 1.00 Malaysia +0.63 +0.63 -1.63 -1.63 Philippines +0.03 +0.03 0.81 0.81 S.Korea +0.48 +0.47 2.27 2.27 Singapore +0.34 +0.27 0.18 0.18 Taiwan +1.49 +1.40 1.35 1.35 Thailand +0.13 +0.20 -0.53 -0.53 (Reporting by Anushka Trivedi in Bengaluru. Editing by Gerry Doyle)