* U.S. 10-year bond yields climb to 1.7442% * Malaysian bonds to stay in FTSE Russell bond index * China bonds to be included in bond index from this year March 30 (Reuters) - Asia"s emerging currencies buckled under a firmer dollar on Tuesday after U.S. bond yields topped 1.7% again, with the Thai baht leading losses, falling nearly a fifth of a percent. Benchmark 10-year U.S. Treasuries climbed to 1.7442%, bolstering the greenback, which also garnered support from worries of a hedge fund default that roiled global banking stocks on Monday. "There are still a number of investors who are concerned about a further spike in UST," Morgan Stanley analysts said in a note, adding that U.S. economic data surprises could push yields higher. "Hence, these investors continue to position defensively." Stocks in Jakarta led declines in Asia, falling more than 1%. Yields on its benchmark 10-year bonds rose 8.4 basis points to 6.84%, with the rupiah slightly lower. Bond yields fall when prices rise. The yield on 10-year Malaysian bonds fell 4.3 basis points to 3.292%, after FTSE Russell removed the country from its watchlist and officially retained it in its flagship government bond index. "This is a much welcome relief, and will allow investors to re-focus on other external drivers," HSBC said. The ringgit, however, dipped 0.1% and stocks were down a third of a percent. FTSE Russell also confirmed that Chinese sovereign bonds will be included in its bond index starting this year, setting the stage for billions in inflows. HSBC said that with roughly $2.5 trillion tracking the FTSE World Government Bond Index, some $130 billion in inflows could be expected, given China"s eventual 5.25% weighting. In Thailand, shares rose 0.4% but gains were capped by state-owned listed oil and gas firm PTT Pcl. A key OPEC+ meeting this week will decide whether output curbs should remain in place to support prices. Indian markets are set to reopen on Tuesday following a market holiday. COVID-19 cases are rising fast in the world"s second most populous nation. On the other end, South Korean shares rebounded as institutional investors turned net buyers, while in Singapore shares rose 0.8% to their highest since February last year. HIGHLIGHTS: ** Malaysia"s AirAsia posts record quarterly loss; shares fall ** Philippines raises $500 mln via discount Samurai bond - IFR ** Top losers on the Jakarta stock index include Bank Mayapada Internasional Tbk PT and Pollux Properti Indonesia Tbk PT Asia stock indexes and currencies at 0338 GMT COUNTRY FX RIC FX FX INDEX STOCKS STOCKS DAILY % YTD % DAILY % YTD % Japan -0.17 -6.12 -0.05 7.01 China -0.03 -0.65 0.57 -0.52 India +0.00 +0.77 0.00 3.76 Indonesia -0.07 -2.84 -1.28 1.82 Malaysia -0.12 -2.99 -0.31 -1.28 Philippines -0.02 -0.89 -0.96 -8.34 S.Korea -0.13 -4.15 1.22 6.95 Singapore +0.01 -1.98 0.77 12.53 Taiwan +0.11 -0.13 -0.03 11.80 Thailand -0.16 -4.01 0.35 9.67 (Reporting by Nikhil Kurian Nainan in Bengaluru. Editing by Gerry Doyle)