S.Korean won at near two-week low Malaysian shares decline; Indonesia, India stocks rise Indonesia inflation at 18-month high in December Jan 3 (Reuters) - Asian stocks were largely mixed on Monday, with Malaysian and Philippine equities falling the most, while currencies weakened as concerns over the Omicron variant and inflation pressured most emerging units on the first trading day of the year. Malaysian shares (.KLSE) declined as much as 1.2% to mark their worst intraday drop in two months as the country witnessed severe flood situation in several states, while stocks in South Korea, Indonesia and India logged modest gains. read more Among currencies, the South Korean won slipped up to 0.4% to its lowest in nearly two weeks, while the Malaysian ringgit , Singapore dollar and the Indonesian rupiah weakened about 0.2%. Investors in risk-sensitive Asian markets are closely watching how the U.S. Federal Reserve will taper its monetary policy, as it faces the economic risks from the Omicron variant and rising inflation rates. read more In Asia, central banks will want to keep rates low to offset the impact on their economies from a surge in COVID-19 cases, without leaving their currencies vulnerable to excessive dollar strength when the Fed begins to withdraw stimulus. Analysts at Mizuho Bank expect the "asynchronous" global economic recovery - with emerging markets trailing the developed markets, vulnerable to contagions, U.S. monetary tightening or China"s rippling credit risks - to not only persist, but "perhaps compound" in 2022. "The policy dilemma for EM Asia will worsen as fiscal policy, despite its stretched bandwidth, remains the mainstay for growth support, while monetary policy is caught in divergent tides of an even slower domestic economic recovery and tighter monetary policy from the Fed," analysts at Mizuho Bank said. Among regional equities, South Korean shares (.KS11) jumped more than 1%, supported by strong exports data, while Indonesian equities (.JKSE) and India"s Nifty 50 (.NSEI) advanced almost 1% in a thin-trading volume session. read more Philippine shares declined about 0.8% after the government said late on Friday it will impose tighter curbs in the capital region over the coming two weeks to limit Omicron infections. read more Singapore stocks (.STI) advanced slightly as data showed the city-state"s economy expanded at its fastest annual pace in over a decade in 2021, showing signs that a recovery is underway after the worst recession on record. read more Analysts at Citi expect a continued rise in already high vaccination coverage in Singapore to facilitate a gradual transition to the endemic phase, limiting damage from future infection relapses, including from Omicron. "With strong fourth-quarter momentum raising the starting point for 2022, we see upside risks to 4% GDP forecast for 2022, especially if gradual reopening keeps growth momentum above trend in first half of 2022," they added. Markets in Thailand , (.SETI), China , (.SSEC) and Japan (.N225) were closed for a holiday. HIGHLIGHTS: ** South Korea"s Dec factory activity expanded at fastest pace in three months read more ** India"s Dec jobless rate hits four-month high of 7.9%-think tank read more ** Shares of Indonesia coal miners drop as export ban rattles sector read more Asia stock indexes and currencies at 0616 GMT COUNTRY FX RIC FX DAILY % FX YTD % INDEX STOCKS DAILY % STOCKS YTD % Japan -0.23 -0.23 (.N225) - - China - - (.SSEC) - - India +0.08 +0.08 (.NSEI) 0.94 0.94 Indonesia -0.13 -0.13 (.JKSE) 0.84 0.84 Malaysia -0.14 -0.14 (.KLSE) -1.16 0.77 Philippines +0.02 +0.02 (.PSI) -0.75 -0.75 S.Korea -0.29 -0.31 (.KS11) 0.35 0.35 Singapore -0.13 -0.13 (.STI) 0.28 0.28 Taiwan +0.24 +0.19 (.TWII) 0.28 0.28 Thailand