*

MSCI EM Asia index rises to highest in nearly five years

*

Taiwan stocks flirt near 28,400 mark

*

Investors await Fed rate decision later in the day

(Updates for afternoon trade)

By Roshan Thomas

Oct 29 (Reuters) -

Stocks in South Korea and Taiwan extended their record

rallies on Wednesday, lifted by renewed optimism over artificial

intelligence demand and growing expectations of a U.S. Federal

Reserve rate cut.

The MSCI index of emerging Asia stocks

jumped nearly 1% to its highest level in almost five years, led

by South Korea and Taiwan, which together

account for more than a third of the gauge.

South Korean shares climbed 1.8% to a record 4,084.09,

reigniting their rally after a brief pause, as SK Hynix

reported record quarterly profit.

The Nvidia ( NVDA ) supplier said memory chip supply

remains tight amid surging demand from artificial intelligence

data centers.

Wall Street also hit fresh highs overnight after upbeat

updates from Nvidia ( NVDA ) and Microsoft ( MSFT ), with Nvidia ( NVDA )

announcing $500 billion in AI chip orders and plans to build

seven supercomputers for the U.S. Department of Energy.

Taiwan's benchmark gained 1.6% to a new peak just below

28,400, with TSMC up 2.7% after Nvidia ( NVDA ) said it was

producing chips at the company's Arizona facilities.

"The record-high levels in both equity markets reflect

more than just a U.S. tech play," said Glenn Yin, Director of

Research at AC Capital Market.

"While the global AI boom has clearly provided a spark,

given the region's deep semiconductor exposure, the rally is

also underpinned by improving earnings revisions, strong export

numbers, a softer dollar and the prospect that global risk

appetite remains strong."

Investors awaited the U.S. Federal Reserve's closely watched

policy decision later in the day, with markets almost fully

pricing in a 25-basis-point rate cut.

Trade developments were also in focus, with U.S.

President Donald Trump set to meet Chinese President Xi Jinping

in South Korea on Thursday.

The U.S. dollar index edged higher ahead of the

Fed meeting, while most Asian currencies were steady.

The Malaysian ringgit, Thai baht and

Taiwan dollar all inched up 0.1%, and the Philippine

peso rebounded 0.5% after hitting a record low of 59.262

per dollar a day earlier amid political uncertainty.

"The US dollar/peso exchange rate would now be a function of

the Bangko Sentral ng Pilipinas (BSP) in terms of interventions

or smoothening the volatility, as one of the major catalysts,

going forward," said Michael L. Ricafort, chief economist,

treasury group at Rizal Commercial Banking Corporation.

The Singapore dollar and the Indonesian rupiah

, lost 0.1% and 0.2% respectively.

HIGHLIGHTS:

** U.S. and Thailand say they won't target exchange rates for

competitive purposes

** Bessent urges Japan government to give BOJ scope to raise

interest rates

Asia stock indexes and currencies at 0713 GMT

COUNTRY FX RIC FX DAILY FX YTD % INDEX STOCKS STOCKS

% DAILY YTD %

%

Japan +0.01 +3.35 2.17 28.61

China India +0.05 -2.96 0.51 10.25

Indones -0.15 -3.22 0.14 14.47

ia

Malaysi +0.14 +6.66 -0.31 -2.06

a

Philipp +0.53 -1.12 0.18 -8.65

ines

S.Korea Singapo -0.07 +5.47 -0.09 17.39

re

Taiwan +0.10 +7.14 1.24 22.83

Thailan +0.14 +6.36 0.04 -6.10

d