* South Korea's KOSPI pares losses to end 0.2% lower

* Indonesian stocks set for worst June since 2015

* Iran and U.S. agree to halt attacks and renew talks

* South Korea unveils $576 billion AI-chip investment

powered by Samsung, SK Hynix

(Updates for afternoon trade)

By Rajasik Mukherjee

June 29 (Reuters) - Asian markets were choppy on Monday as

investors weighed AI-driven growth against rising cost

pressures, while South Korea's sweeping investment push into

chips and AI steadied sentiment after recent losses and a

fragile U.S.-Iran ceasefire.

The MSCI EM Asia gauge inched higher and the

index tracking ASEAN stocks advanced 0.6%. Both

indexes hit a two-week low in the previous session.

Equity markets moved unevenly, reflecting investor caution

over stretched AI-driven rallies, particularly in South Korea

and Taiwan, and lingering uncertainty about how rising costs

could filter through the sector.

South Korea's KOSPI, which lost 7% last week, shed

as much as 3.4% earlier in the session on Monday,

However, it pared much of its losses, ending 0.2% lower,

after South Korea rolled out sweeping chip and AI mega-projects,

with investments worth more than $576 billion over several

years.

With the AI investment cycle becoming increasingly capital

intensive, "investors are likely to question whether demand for

AI chips and data centre capacity can continue growing fast

enough to justify such aggressive spending," said Lukman Leong,

an analyst at Doo Financial Futures, a brokerage.

Stocks in Taiwan gained as much as 2.1%. The index

has risen about 56% so far this year and is the

second-best-performing market in the region behind the KOSPI's

nearly 100% rally.

In Southeast Asia, Thailand's stock index rose 1.7%,

driven mainly by electronic products manufacturer Delta

Electronics Thailand's 5% gains on Monday. The firm,

which counts Nvidia as a client, has surged 84% this year.

Globally, the U.S. and Iran traded fresh strikes over the

weekend before they agreed to stop their tit-for-tat attacks and

meet in Qatar on Tuesday, leaving investors nervous about a

fragile ceasefire.

Malaysian shares shed 0.4%. Equities in Jakarta

slid 1% and were set for their worst June since 2015.

The index was also tracking its sixth consecutive month of

declines, with losses of about 4.7% in June.

The dollar index was steady around 101.34, supported

by lingering geopolitical uncertainty and rising prospects of a

Federal Reserve rate hike this year.

"Across EM Asia, regional currencies are broadly stable,

with the lack of a sustained spike in oil prices easing pressure

on net energy importers such as India, Thailand, and the

Philippines," added Leong.

"The relatively muted market reaction also reflects

expectations that any Middle East conflict will remain

contained, allowing investors to refocus on domestic

fundamentals."

The Malaysian ringgit led gains, rising more than

0.6% to 4.057 per dollar, touching its highest point in nearly

two weeks. The Indonesian rupiah advanced to 17,850 per

dollar.

The Philippine peso and the Thai baht were

largely flat. The South Korean won fell 0.4%, the

Taiwanese dollar inched 0.2% lower.

Elsewhere, the Bolivian government said on Friday that the

country would adopt a flexible exchange-rate system, effectively

devaluing its currency by ending a 15-year dollar peg, in a

major policy shift aimed at restoring economic stability.

HIGHLIGHTS:

** Yield on Indonesia's 10-year bonds at 7.182%

** China's central bank offers 300 billion yuan in new

overnight reverse repos

** Indonesia Stock Exchange shareholders approve CEO

appointment

** Venezuela quake death toll nears 1,500 as rescue work

goes on

** Thai lawmakers begin debate on $115 billion budget for

2027

Asia stock indexes and currencies at 0704 GMT

COUNTRY FX RIC FX FX YTD INDEX STOCKS STOCKS

DAILY % % DAILY YTD %

%

Japan -0.04 -3.18 0.15 38

China India +0.08 -4.72 -0.34 -8.25

Indonesia +0.31 -6.61 -0.93 -32.45

Malaysia +0.69 -0.02 -0.32 -1.06

Philippine +0.16 -3.85 0.68 1.00

s

S.Korea Singapore +0.02 -0.56 0.16 11.92

Taiwan -0.08 -1.40 0.96 55.37

Thailand +0.08 -5.54 1.75 24.58