Equities in the Philippines outshone their emerging Asian peers on Friday after its central bank kept interest rates at record lows, while stocks in Singapore were hit as the city-state logged record COVID-19 cases.

Manila's benchmark index added 0.7% and was set for its fourth straight day of gains after Bangko Sentral ng Pilipinas (BSP) on Thursday looked past increasing inflation pressures to keep its monetary policy loose.

The bank hopes low rates will spur an economic rebound in the Philippines, which was forced to cut its 2021 growth outlook last month as COVID-19 infections and lockdowns likely hurt its third quarter performance.

The BSP raised its average inflation forecasts for 2021 through 2023, but expects inflation to ease to 3.3% next year from a forecast 4.4% this year.

"With headline inflation slowly returning to the BSP's inflation target band of 2%-4%... and slow vaccination progress likely to weigh on activity through year-end, we expect the BSP to keep the policy stance accommodative for the rest of the year," Goldman Sachs analysts said.

They added that BSP would be patient in normalising policy and expect the central bank's policy rate to be on hold until late 2022.

Singapore's FTSE Strait Times index gave up 0.3%, while South Korea's Kospi fell as much as 0.2% before trading flat, after daily COVID-19 cases hit record highs in both nations.

Singapore, which has inoculated more than 80% of its population, has seen a spike in cases recently after it relaxed some curbs, prompting it to pause further reopening.

The country's manufacturing data for August was also due at 0500 GMT.

Regional currencies were mostly flat to lower against the US dollar, with investors still wary of the fate of debt-laden property developer China Evergrande and its potential fallout on the Chinese economy.

Evergrande bondholders were in limbo as time ticked away on an interest payment deadline, while some worried it might be roughly a month before the situation becomes clearer.

Malaysian stocks dropped 0.6% as industrial firms weighed, and gave up almost all the gains made in the previous session. The country will report inflation data for August at 0400 GMT.

Most regional share markets were set for a muted weekly performance.

Investors have largely taken the US Federal Reserve's tapering plans in their stride.

The central bank said on Wednesday it will likely begin reducing its monthly bond purchases as soon as November and signalled interest rate increases may follow more quickly than expected.

"It seems that the Fed has prepared markets well for a tapering move by year-end," said Yeap Jun Rong, a strategist at IG.

"A shift towards the normalisation of monetary policies also appears to be deemed as a vote of confidence for the strength in the economy ahead."

Highlights:

** Malaysia's 10-year benchmark yield is up 4 basis points at 3.395%.

** Singapore's 10-year benchmark yield is up 4.3 basis points at 1.486%.

** The top loser on Malaysia's benchmark index was Hartalega Holdings, down 2.5%.