* Rupiah set for worst day since Feb. 26 * Won hits lowest since May 20 * Indonesia, Taiwan c.bank rate decisions due * Graphic: World FX rates tmsnrt.rs/2RBWI5E * Asian stock markets: tmsnrt.rs/2zpUAr4 By Shashwat Awasthi June 17 (Reuters) - South Korea"s won led declines among emerging Asian currencies on Thursday as the dollar rose after the U.S. Federal Reserve signalled it would raise interest rates earlier than expected, while Indonesian investors awaited a central bank meeting. The won slumped 1.1% and was on track for its worst day since early May as the sudden shift in the Fed"s outlook sent the greenback to two-month highs. Seoul"s KOSPI index shed half a percent. The rupiah suffered its biggest one-day drop since late February. Jakarta"s main stock index was flat, however, as Bank Indonesia was widely expected to leave record low interest rates unchanged as the economy struggles for traction. The Fed"s indications on policy tightening and tapering bond buying bruised most emerging market assets as dealers feared this could give regional central banks impetus to follow suit, which could cycle cash out of those markets. "The stage is set for what I feel is a period of somewhat higher volatility as the narrative changes and traders adjust to a future reduction in liquidity conditions," said Chris Weston, head of research at broker Pepperstone. A majority of Bank of Korea"s board members have already signalled support for pulling back pandemic-driven stimulus, minutes of its policy meeting showed this week. The firmer dollar sent the Thai baht and the Philippine peso 0.5% and 0.4% lower, respectively. Equity markets also saw traders take money off the table. Philippine shares, which have soared more than 11% in the last three weeks, slid 1.3% and were set for their biggest one-day drop in more than a month. "While markets start adjusting to expectations for a reduction in policy support ahead, risk-off sentiments may linger at a time where markets have had a strong run-up since the start of the year," said Yeap Jun Rong, a market strategist at IG. Thailand"s stock index outperformed its peers, as the government"s plan to reopen the nation to visitors within 120 days and kick-start the tourism-reliant economy helped it add 0.2% on the day. HIGHLIGHTS: ** Indonesian 3-year benchmark yields are up 6 basis points at 4.707%. ** In the Philippines, top index losers are Bloombery Resorts down 2.4%, Universal Robina down 2.3%, and Ayala Land down 2.3%. Asia stock indexes and currencies at 0345 GMT COUNTRY FX RIC FX DAILY % FX YTD % INDEX STOCKS DAILY % STOCKS YTD % Japan -0.01 -6.74 -1.31 5.33 China -0.38 +1.67 0.17 1.48 India 0.00 -0.35 0.00 12.77 Indonesia -0.45 -1.82 0.02 1.69 Malaysia -0.34 -2.66 -0.44 -3.43 Philippines -0.37 -0.85 -1.35 -3.65 S.Korea -1.12 -3.86 -0.53 13.50 Singapore +0.01 -1.12 0.19 10.61 Taiwan -0.16 +2.70 -0.19 17.25 Thailand -0.45 -4.28 0.17 12.30 (Reporting by Shashwat Awasthi in Bengaluru; Editing by Kim Coghill) Our Standards: The Thomson Reuters Trust Principles.