*

MSCI EM stocks index up 1%, FX flat

*

Korea's won firms after Trump says trade deal reached

*

Investors monitor geopolitics in eastern Europe, Middle

East

*

IMF to visit Mozambique next month for talks on support

options

By Johann M Cherian

Oct 29 (Reuters) - An index tracking emerging market

equities rose to hit its highest in more than four years on

Wednesday, boosted by signs of cooling Sino-U.S. trade tensions

and on optimism around artificial intelligence.

MSCI's EM equities index gained 0.97% to touch its

highest since February 2021.

A separate gauge tracking currencies was

hovering near a one-month high as caution prevailed ahead of a

U.S. Federal Reserve call on monetary policy later in the day.

Markets are pricing in a 25 basis points interest rate cut.

A Fed interest rate cut is likely to weigh on the U.S.

dollar and support emerging market currencies. A weaker dollar

would potentially make borrowing costs cheaper for countries and

companies relying on international debt financing.

On the trade front, investors were expecting President

Donald Trump would strike a deal with China during his Asia tour

that could see reduced U.S. tariffs on Chinese goods in exchange

for Beijing's commitment to curb exports of fentanyl precursor

chemicals.

Also aiding sentiment was a Reuters report that China's

state-owned COFCO bought three U.S. soybean cargoes - the

country's first purchases from this year's U.S. harvest. Against

this backdrop Shanghai stocks closed at their highest

since 2015.

"We think a more stable and predictable trade relationship

is likely amid continued de-escalation," a group of strategists

at UBS Global Wealth Management said in a note.

"The China equity rally has more room to run. In particular,

we like China's tech sector as accelerating AI innovation is

driving rapid adoption."

Artificial intelligence dominated the wider mood with

tech-heavy markets South Korea and Taiwan

trading at record highs after U.S.-based Nvidia's ( NVDA )

supplier SK Hynix reported a record quarterly

profit.

Korea's won firmed 0.4% to 1,424 per dollar after

Trump said he struck a trade deal with the country, although

details were scant.

Geopolitics were in focus in the Middle East after a brief

spat between Israel and Hamas. Tel Aviv stocks and the

shekel traded marginally higher.

Caution also prevailed in emerging Europe, after Polish jets

intercepted a Russian aircraft that was flying a reconnaissance

mission in international airspace over the Baltic Sea.

Currencies including the zloty, Czech crown

and Romania's leu were steady against the

euro, while an index tracking bourses in the region

slipped 0.3%.

Elsewhere, the International Monetary Fund will visit

Mozambique in November to continue discussions on the Southern

African country's macroeconomic challenges and possible

financial support, its mission chief said.