* MSCI stocks set for weekly declines, FX for gains

* Asian chip stocks gain ahead of SK Hynix's US listing

* Polish central bank sees higher-than-expected inflation

By Utkarsh Hathi and Purvi Agarwal

July 10 (Reuters) - Most emerging market stocks and

currencies gained on Friday, with those in Asia driven by

optimism around AI, while investors assessed developments in the

Middle East that put stocks on track for weekly declines.

MSCI's global EM stocks index rose 0.8%, with gains

largely driven by tech-heavy Asian bourses, ahead of South

Korean chipmaker SK Hynix's U.S. market debut, which

will test AI demand and set the tone for the sector before

quarterly earnings.

South Korea's benchmark KOSPI advanced 2.5%, while

Hong Kong's benchmark Hang Seng rose 0.6%, registering

their sharpest weekly gain in nine months.

Earlier this week, a global pull-back in tech over worries

of lofty valuations limiting the rally and renewed Middle East

tensions after U.S. President Donald Trump said an interim deal

with Iran was "over", weighed on risk appetite and put the stock

index on track for weekly declines.

"Midterms matter for Trump, and he is inclined to get a deal

to keep a lid on oil prices.... if we get a deal which is

unfavourable for the US, post midterms, we could see renewed

escalation in the Middle East," said Mohit Kumar, chief European

economist at Jefferies, referring to midterm elections to the

U.S. Congress in November.

On Friday, other EM stocks also advanced with Polish

blue-chip stocks up 1.5% and Hungary's benchmark

added 0.4%.

Romania's edged 0.3% higher, swinging between gains

and losses for the week. It could snap a five-week winning

streak if it closes lower for the week.

South African equities gained 0.3%, but a decline

in metal prices such as gold weighed on miners, limiting the

rise of the index. Turkish stocks added 1.3%.

On the currencies front, the MSCI index

gained 0.1%, and was headed for a modest weekly advance.

Currencies in Asia were mixed against the dollar. South

Africa's rand and Turkey's lira were little

changed.

Most emerging European currencies traded lower against the

euro, with the Polish zloty and the Hungarian forint

depreciating 0.3% each.

Poland's central bank expects inflation to be on a slightly

higher path than its previous prediction because of the Middle

East conflict, while central banker Henryk Wnorowski said it was

too early to decide on a rate cut in September.

Investors took cues from last week's weaker-than-expected

jobs report in the United States, which pointed to a stable

labour market and prompted investors to pull back on some bets

on imminent interest rate hikes from the Federal Reserve.

Elsewhere, the yen bounced on news that Japan plans to encourage

pension funds to increase their holdings of domestic financial

assets, a move analysts said could offer more support to the

battered currency than intervention.

HIGHLIGHTS:

** Fuel markets flash supply crunch despite calmer oil prices

** Turkey's inflation uptick poses risks to near term outlook,

says central bank governor

** Flows to India equity mutual funds rebound from one year-low,

AMFI data shows

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