* Malaysia jumps 2.8 percent to highest close in two weeks
* Financials and blue chips rebound from lows this week

By Yvonne Cheong

SINGAPORE, Aug 29 (Reuters) - Singapore and Malaysia stock markets rebounded on Friday to their highest close this week, as investors picked up financials and other blue chips, but analysts said they expect volatility ahead as growth concerns and politics weigh.

Malaysia's benchmark index <.KLSE> rose 2.8 percent to its highest close since August 15 after its Prime Minister unveiled a budget that boosted shares of casino operator Genting , which jumped 10.4 percent.

"It was the end of the month. You had a budget with no gambling tax rises. Genting alone contributed four points to the index today," said a Malaysia-based trader.

Other Asian markets climbed after a big upward revision to second-quarter U.S. economic growth boosted the outlook for demand, but shares posted their fourth consecutive monthly decline.

Singapore stocks <.FTSTI> rose 1.8 percent, while Indonesia <.JKSE> added 1 percent. The Philippine index <.PSI> was 1.2 percent higher and Thailand <.SETI> edged up 0.2 percent. Vietnam's market <.VNI> shed 0.2 percent on the day but gained more than 20 percent in August. Singapore fared worst during August, falling 5.7 percent.

Bourse operator Singapore Exchange jumped 4.1 percent to its highest in over a week after Macquarie Research upgraded the stock. [nSIN59062]

Top lender DBS Bank also surged 3.1 percent, while rival United Overseas Bank recovered 1.8 percent. "It's a technical rebound given that the market has been heavily sold the past week," said a Singapore-based dealer.

Singapore-listed Chinese shipbuilders COSCO Corp also lept 8 percent as China stocks <.SSEC> rose on hopes of regulatory steps to boost the market. [nSHA89432]

In Malaysia, Maybank > soared 6.1 percent to its highest in 3 weeks, while Bumiputra Commerce swelled 5.7 percent to a two week high.

Maybank's $2.7 billion attempt to buy Bank Internasional Indonesia was dealt another blow on Friday, with Indonesia's regulator ruling out making an exception on takeover rules. Malaysia's central bank blocked the plan on concerns the rules could cause losses at Maybank. Index heavyweights Sime Darby and IOI Corp were also lifted as palm futures climbed 3.1 percent. (Additional reporting by David Chance, Editing by Lincoln Feast)