* Banks lead Malaysian declines after new lockdown * Analysts expect economic harm from Malaysia"s new lockdown * Rupiah falls as U.S. 10-year yields top 1% By Nikhil Nainan Jan 12 (Reuters) - Malaysia led losses across Southeast Asian stock markets on Tuesday after a state of emergency was declared in the country to curb the spread of COVID-19, threatening its economic recovery and sending banking stocks sharply lower. Malaysia"s main stock index pared some of its 1.6% decline by noon, while other Asian stock markets tracked overnight losses on Wall Street. South Korean shares were closed down 0.7%. The prospects for further U.S. fiscal stimulus had boosted several Asian markets on Monday. Malaysia"s King Al-Sultan Abdullah declared a nationwide state of emergency on Tuesday to curb infections, a day after the prime minister announced a 14-day lockdown in the capital and five states. Alex Holmes, an emerging markets economist at Capital Economics, said the lockdown will likely "hit the economy hard," prompting the research firm to cut its 2021 growth forecast to 7% from 10%. Holmes also expects the central bank to cut rates next week from the current 1.75%. The ringgit weakened 0.2%. Meanwhile, CGS-CIMB Securities reckons the restrictions could be extended and estimates every fortnight of curbs will shave 0.7% off Malaysia"s 2021 growth forecast. Indonesia"s rupiah dipped 0.5% against the dollar, which tracked U.S. Treasury yields higher. Ten-year U.S. yields topped 1% last week for the first time since March last year. The rupiah is generally favoured by foreign investors seeking to tap Indonesia"s high-yielding debt. TD Securities expects short-term pressure to continue on the rupiah as U.S. yields rise and inflows into local bond markets temporarily ease. The Taiwanese dollar, which tends to move in wider ranges, strengthened 1.8%. Taiwan"s central bank has sent inspectors to domestic banks to investigate whether exporters are speculating in foreign currency as the local currency has soared in recent months, Reuters reported on Monday. HIGHLIGHTS: ** Indonesian 3-year yields are up 7.7 basis points at 5.071%, while 10-year benchmark yields are up 2.80 basis points at 6.246% ** CIMB Group Holdings, RHB Bank Bhd and Hong Leong Bank Bhd all slumped more than 3% Asia stock indexes and currencies at 0656 GMT COUNTRY FX FX FX INDEX STOCKS STOCKS RIC DAILY % YTD % DAILY % YTD % Japan +0.08 -0.88 0.09 2.62 China +0.29 +1.04 1.92 3.64 India +0.09 -0.34 0.23 3.84 Indonesia -0.49 -0.78 -0.04 6.71 Malaysia -0.20 -0.94 -0.91 -1.51 Philippines +0.18 -0.02 -0.64 1.66 S.Korea -0.24 -1.25 -0.71 8.79 Singapore +0.14 -0.59 -0.08 4.84 Taiwan +1.75 +1.74 -0.36 5.21 Thailand -0.10 -0.63 -0.19 5.81 (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Ana Nicolaci da Costa; Editing by Shailesh Kuber)