* EM stocks rise 0.38%, currencies up 0.22%

* South Korean equities poised to end seven-week losing

streak

* China's yuan headed for seventh straight weekly gain

By Niket Nishant

Aug 14 (Reuters) - Emerging market stocks were on course for

their biggest weekly gains since June, as investors' affinity

for AI favourites resurfaced despite an ambiguous rate outlook.

The MSCI index of emerging market stocks rose

0.38% on Friday and was set for gains of 2.64% for the week -

the steepest jump since June. The currencies gauge

rose 0.22%.

Strong earnings from some tech majors that serve as a

barometer for AI demand improved sentiment during the week.

Benign U.S. inflation data also reduced the urgency for rate

hikes and helped Wall Street, boosting emerging market bourses

that take their cues from U.S. stock indexes.

The gains show that investors remain eager to back AI, one

of the most powerful growth themes in the market, even as the

inflation outlook remains murky due to uncertainty over oil

prices and tensions in the Middle East.

"When you tell a market that you're going to spend a

trillion dollars over the next few years in an industry,

inflation prints don't matter for that industry," said Bill

Mann, chief investment strategist at Motley Fool Asset

Management, referring to the vast sums companies have committed

to AI spending.

ASIA MARKETS ADVANCE

South Korea's KOSPI rose 2.42% on Friday and was set

to snap a seven-week losing streak. The Korean won

strengthened 0.39% against the dollar.

Earlier this week, a presidential official said South ‌Korea

would launch a 5 trillion won ($3.52 billion) semiconductor fund

as Seoul seeks to accelerate plans for new chip manufacturing

hubs across the country.

Taiwanese equities were also set for the second

consecutive week of gains, while the Taiwan dollar hit

its strongest level in over a month on strong inflows into the

country's stocks.

In India, the rupee was little changed, with

traders saying that the central bank likely intervened to

support the currency.

China's yuan rose 0.05% versus the dollar,

heading for a seventh straight weekly gain, aided by a firmer

midpoint fixing and some hopes that the U.S. Federal Reserve

will not hike rates in September.

Polish equities were 0.18% lower, while the Polish

zloty was slightly weaker against the euro.

Prime Minister Donald Tusk said on Thursday that the

government plans to reintroduce some measures to lower fuel

prices in the last two weeks of August.

Malaysia's central bank said the economy could expand by

around 5% this year, toward the upper end of its 4%-5% growth

forecast, after stronger-than-expected second-quarter growth.

The ringgit was largely unchanged against the dollar.