* U.S. 10-year bond yields climb to 1.7630% * 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 set a new 14-month high, while stock markets in Indonesia and the Philippines fell around 1%. Benchmark 10-year U.S. Treasuries climbed as much as 1.7630% in late Asian trade, 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 1.2%. Yields on its benchmark 10-year bonds rose 3.69 basis points to 6.793%, while the rupiah dipped. Indonesian bonds are favoured by foreign investors for their relatively high yields. Meanwhile, the yield on 10-year Malaysian bonds fell 4.3 basis points to 3.292% - their lowest in more than two weeks - 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. However, the ringgit slipped 0.1% and stocks were down 0.2%. FTSE Russell also confirmed that Chinese sovereign bonds would 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. Also on investors radar, U.S. President Joe Biden is expected to outline how he would pay for a $3 trillion to $4 trillion infrastructure proposal on Wednesday. Stocks in India, where markets reopened after a public holiday on Monday, jumped nearly 2% boosted by banks after a steel conglomerate completed an insolvency process, allowing lenders to recover some of their bad loans. HIGHLIGHTS: ** Malaysia"s AirAsia posts record quarterly loss; shares fall ** Philippines raises $500 mln via discount Samurai bond - IFR ** Bank Mayapada Internasional Tbk PT, Pollux Properti Indonesia Tbk PT and Bank QNB Indonesia Tbk PT led losses in Indonesia Asia stock indexes and currencies at 0631 GMT COUNTRY FX RIC FX FX INDEX STOCKS STOCKS DAILY % YTD % DAILY % YTD % Japan -0.25 -6.19 0.16 7.25 China +0.02 -0.60 0.37 -0.72 India -0.65 +0.11 1.88 5.71 Indonesia -0.07 -2.84 -1.18 1.92 Malaysia -0.10 -2.97 -0.18 -1.16 Philippines +0.01 -0.86 -0.94 -8.32 S.Korea -0.17 -4.18 1.12 6.84 Singapore +0.02 -1.97 0.72 12.47 Taiwan +0.13 -0.12 0.48 12.37 Thailand -0.19 -4.04 0.56 9.90 (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Gerry Doyle and Amy Caren Daniel)