* South Korea stocks hit record as most Asian bourses

fall

* Sri Lanka delivers outsized 100 bps rate hike

* Senegal bonds slide after new PM appointed

By Avinash P and Purvi Agarwal

May 26 (Reuters) - Stocks in emerging markets were mixed

on Tuesday and currencies weakened, as investors assessed U.S.

strikes on Iran a day after officials had raised market

expectations of an imminent U.S.-Iran peace deal.

U.S. Secretary of State Marco Rubio said negotiating a deal with

Iran could "take a few days," quashing hopes for a more rapid

end to the conflict as U.S. forces conducted what Washington

called defensive strikes in southern Iran.

Rubio had said on Monday the U.S. would pursue diplomacy

before considering other options, and Iranian officials were

engaged in talks with their Qatari counterparts for a deal.

"It's frustrating because U.S. officials are playing with

markets and the narrative the way a cat plays with a mouse, and

there is very little investors can do about it," said Ipek

Ozkardeskaya, senior analyst at Swissquote Bank.

On Tuesday, MSCI's index tracking global EM stocks

added 0.5% to hover near record highs, while the currencies

gauge was flat.

TECH EUPHORIA STILL PROVIDES SOME SUPPORT

The stocks index hit a record earlier this month, buoyed by

rallies in tech-heavy Asian bourses, but eased from the levels

due to uncertainty surrounding the peace deal.

South Korea's KOSPI, however, continued to draw

support from tech enthusiasm, gaining 2.6% to a record high.

Other major regional bourses, including in India and

Taiwan, traded lower.

Investors have been worried about the health of Asian

economies as they are heavily reliant on Middle East energy

supplies.

These concerns have pushed Indonesia's rupiah to record

lows against the dollar, while Sri Lanka's central bank stunned

markets with an outsized 100 basis point increase to its policy

rate, its biggest hike in three years.

In the Middle East, Turkish stocks edged 1.3% lower

and the currency fell 0.4%, set for its biggest

intraday drop since July in a truncated trading session.

Assets last week were volatile after an unprecedented judicial

crackdown on Turkey's main opposition party.

South Africa's rand and local stocks fell

0.5% and 1.1%, respectively, partly tracking a dip in gold

prices. Moody's revision of the gold-exporting country's outlook

to 'positive' from 'stable' helped spark a rally on Monday.

Most currencies in emerging Europe were subdued against the

euro. Hungary's forint weakened 0.5% ahead of a local

central bank decision, where it was widely expected to hold

rates steady.

Equities in Poland fell 0.2% and Romania

were flat, while ones in Hungary were up 0.7%.

Elsewhere, Senegal's President Bassirou Diomaye Faye named an

economist as prime minister on Monday, three days after

dismissing the old government that had spoken against debt

restructuring.

Senegal's hard currency government bonds plunged with the 2028

euro-denominated bond down some 5.6 cents on the euro - its

second largest daily decline in nearly a decade. The

dollar-denominated ones fell nearly 4 cents on the dollar.

HIGHLIGHTS:

** South Korea's central bank to hold key rate on May 28, hikes

expected from Q3: Reuters poll

** Japan, Mercosur to start EPA trade talks, Kyodo says

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