* MSCI EM FX up 0.3%, stocks add 1.6% to hit record high

* Israeli shekel at multi-decade highs, CDS around Oct

2023 levels

* Monetary policy decision due in Czech republic

By Purvi Agarwal

May 7 (Reuters) - Emerging market stocks and currencies

gained on Thursday on indications a peace deal between Iran and

the United States could be reached soon, while persistent

euphoria around artificial intelligence further added to market

gains.

Brent crude futures fell more than $3 to $98 a

barrel, a level below the $100-mark that is seen as critical for

the health of the global economy.

On Wednesday, U.S. President Donald Trump predicted a swift

end to the war as Tehran considered a U.S. peace proposal.

Markets heaved a sigh of relief on the signs of progress,

with MSCI's gauge tracking EM currencies up

0.3%, while the stocks gauge rose 1.6% to a record

high.

"The risk-on trade driven by Gulf de-escalation triggered

sizeable rallies in EM currencies... today, FX is showing signs

of stabilisation, but higher equities continue pointing to

optimism around further de-escalation," said Francesco Pesole,

FX strategist at ING.

"Volatility in FX should remain elevated as markets await

the final word on a US-Iran deal."

Most EM currencies strengthened against a slightly weaker

dollar. China's yuan appreciated to its highest level in more

than three years.

Turkey's lira was subdued against the dollar,

while South Africa's rand advanced 0.6%, tracking gains

in gold prices, a top export of the country.

Most currencies in emerging Europe were subdued against the

euro. Romania's leu traded flat after shedding over 3%

in the last five sessions.

A no-confidence vote toppled Prime Minister Ilie Bolojan's

government, with policy deadlock expected ahead. That could

delay reforms needed to unlock funds from the European Union and

put the country's credit ratings at risk.

In the midst of mixed performance across emerging market

regions, Israeli assets have quietly outperformed. The shekel

was trading at its highest level against the dollar since

1993, while Israeli stocks have been trading at record

highs.

Israel's 5-year credit default swap fell to 63 basis points,

alevel last sustained before the October 2023 Hamas attacks.

Tech-heavy stock bourses in South Korea and Taiwan

continued to enjoy the AI boost, each closing over 1%

higher. Korea's Kospi breached 7,000 points for the first time

on Wednesday in an eye-popping rally.

Bourses in Europe, on the other hand, took a breather, with

stocksslipping0.8% in Poland and 0.3% in Hungary

. Romanian equities jumped 2.2%, driven by a 6.7%

jump in Premier Energy.

South African stocks gained 0.4%, while equities in

Turkey were up 0.1%.

HIGHLIGHTS:

** Thai central bank chief revises GDP growth forecast up to

2.1% for this year

** Malaysia holds key rate steady, but warns of

uncertainties from Middle East conflict

** Indonesia targeting 2027 GDP growth in 5.9% to 7.5%

range, minister says

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