KUALA LUMPUR (AFP) - Lydia Ko recovered from a previous day setback with an improved performance at the Sime Darby LPGA on Friday but failed to claw back her first-round deficit after she watered the final hole.

The world No. 1 golfer finished the day tied 23rd for a two-under 69, a slight recovery from her even-par score on Thursday for a halfway total of 140.

A promising round however ended with the Kiwi stumbling at the end after her shot found the lake. But Ko, who is bidding to win her first title since the Marathon Classic in July, was not too perturbed with her poor finish.

"Obviously that's not that great to end with a bogey and double on the last two holes, but overall, I think I played more solid today... so it's good signs going into the weekend," she said.

The 19-year-old is using a Malaysian caddie, S. Suntharaj, after firing Jason Hamilton earlier this month.

Ko looked pleased with his expertise, giving him a fist bump at the end of the round.

"He's got a lot of experience so we've been having a lot of fun out there and he's been trying to keep me cool out here in the heat."

But it was overnight leader Amy Yang who continued to dominate the leader board, dropping in a 69 to take a three-shot lead at the halfway stage of the tournament in Kuala Lumpur.

The South Korean hit a solid 125-yard wedge shot for an eagle on the par-four 11th round for the advantage, at 10-under.

"I hit my pitching wedge, just full pitching wedge to the pin and it came off really solid off the face.

"It looked like it was going to go really close but it went in. When the ball disappeared, I went, yay, finally," said Yang, who won both her LPGA titles on Asian soil.

Hur Mi Jung, Candie Kung and Anna Nordqvist completed the chasing pack behind Yang, with 2014 winner Feng Shanshan, former Major champ Michelle Wie and Jang Ha Na among the group of golfers one shot behind the trio.