JAKARTA, May 20 : Emerging Asian equities and currencies gained after China cut a key lending rate to support the economy, and as the dollar and U.S. yields lost steam, while the Indonesian rupiah firmed after the government said it would lift an export ban on palm oil.

Equities in Seoul rose nearly 2% on Friday, on track to mark the best week in two months, while Indian shares advanced more than 2%, set to deliver their first weekly gain in six.

China cut its five-year loan prime rate (LPR), which influences the pricing of mortgages, by a bigger-than-expected margin of 15 basis points, as authorities seek to cushion a sharp economic slowdown, though it left the one-year LPR unchanged.

Risk sentiment across Asian markets improved on hopes that China was set to launch more stimulus, and as the US dollar and yields weakened.

The dollar's appeal as a safe haven was eclipsed by a decline in U.S. yields as investors rushed for the safety of Treasury bonds.

"Some support measures for the Chinese economy and some stability in the Chinese renminbi have helped usher in a period of consolidation in FX markets.

This may well last into next week, although we would consider this a pause not a reversal in the dollar's bull trend," said analysts at ING. Indonesia, the world's top palm oil exporter, said it will lift an export ban on palm oil from Monday after imposing the policy on April 28.

But it will impose a domestic sales requirement for palm oil, to shore up local supplies of cooking oil.

"Lifting of the ban is a definite positive for the rupiah as it was a factor that was weighing on the currency and hurting the current account position of the country," said Mitul Kotecha, senior EM strategist with TD Securities.

The rupiah, which dropped nearly 1.6% since crude palm oil shipments were halted at the end of April, edged 0.5% higher, while shares in Jakarta advanced more than 2% to scale their highest in more than a week.

China's yuan eased, but still looked set for its biggest weekly gain in a year, snapping a sixth straight weekly decline, reflecting broad dollar weakness in global markets.

Mirroring the shift in risk appetite in equities, currencies in the region also advanced with the South Korean won and the Indian rupee heading gains, advancing 0.8% and 0.3%, repectively.

Still, worries continued to grow that the U.S. Fed and other central banks have fallen behind the curve in stemming inflation and may have to tighten policy even more aggressively in coming months.

Yields on high-returning Indonesian benchmark bonds , which has fallen nearly 1.3% this week, eased 82 basis points to 7.254%.

 - Reuters