* MSCI EM FX, stocks set for weekly, monthly gains

* Polish stocks set for biggest monthly jump this year

* S&P to review ratings on Hungary, South Africa

By Purvi Agarwal

May 29 (Reuters) - Indexes tracking emerging market

stocks and currencies were on track to notch a monthly gain on

Friday, on investor hopes that U.S. and Iran were moving towards

a deal that could put an end to their three-month conflict.

MSCI's index tracking EM stocks rose 1.6%, hovered

near record highs hit earlier in the week, while the currencies

gauge was flat. Both indexes were on track to

close the week higher.

While concerns over Asia's dependence on Middle East energy

has weighed on the region's assets, investors took on more risk

this week banking on an end to the conflict.

Investors also bet on the AI euphoria, sending tech-heavy

stock bourses to record highs. However, gains were capped as

markets awaited more clarity on ceasefire extension agreement

that would also lift restrictions on shipping through the Strait

of Hormuz, thought President Donald Trump has yet to approve

it.

South Korea's KOSPI jumped 3.6% with LG Electronics

up about 30%. Most AI-linked stocks also gained

after Dell's forecast lift overnight.

Stocks in Taiwan and Hong Kong gained 2.5% and

0.7%, respectively.

The optimism spilled into emerging Europe with bourses in

Poland up 0.5% and Hungary up 0.7%. Romanian

stocks slipped 0.2%.

Polish and Romanian equities are set for their biggest

monthly jump since December and January, respectively.

Stocks in South Africa were 0.3% higher, aided by a

slight uptick in gold prices. They are set for monthly declines

of more than 2%, the biggest since January this year.

The dollar index that measures the greenback against

a basket of currencies, had lost ground following reports of the

deal in the previous session. It stabilised 0.1% on Friday.

"The ceasefire extension in Iran is helping markets trade

optimistically again, but we ultimately need to see a reopening

of the Strait of Hormuz to take the dollar much lower from

here," said analysts at ING in a note.

EM currencies were mixed against the U.S. dollar, with most

Asian ones flat-to-lower. Indonesia's rupiah depreciated

0.5% to another record low of 17,885 against the dollar.

South Africa's rand weakened 0.2% while markets in

Turkey were closed for a third session. The former's central

bank delivered an expected 25 basis-point interest rate hike on

Thursday, its first in three years.

Most currencies in emerging Europe were largely subdued. But

Hungary's forint slumped 0.8% against the euro, on

track for its steepest one-day fall in two months.

S&P is scheduled to review its rating on Hungary and South

Africa later in the day.

HIGHLIGHTS:

** Hong Kong plans tax cuts on bonus pay to lure top fund

managers, sources say

** Sri Lanka monetary stance appropriate, 3% growth target

within reach, IMF says

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