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Taiwan stocks hit record highs

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South Africa inflation slows in April

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EM stock index up 0.3%

By Shashwat Chauhan

May 22 (Reuters) - Emerging market equities rose on

Wednesday, lifted by stock markets in Taiwan and India, while

most currencies steadied as investors awaited more cues on the

Federal Reserve's interest rate trajectory.

The MSCI's index for emerging market stocks added

0.3%, inching back towards a more-than-two-year high hit earlier

this week.

Shares in Taiwan closed 1.5% higher, touching a

record high on an intraday basis, while India's benchmark stock

index was last up 0.3%, with IT stocks among gainers.

Most currencies traded in tight ranges as investors

refrained from making big bets in the absence of major catalysts

and cautionary commentary from Fed officials regarding monetary

policy.

Two Fed officials said they still expect inflation to

continue to decline, but feel the process will take time and

central bankers will need to be patient in deciding when it is

time to cut interest rates.

"With volatility relatively low, it seems to suggest that

investors will comfortably go back into carry again, which for

some emerging markets means that their currencies are going to

appreciate quite significantly once again," said Michael

Metcalfe, head of macro strategy at State Street Global Markets.

"Unless there's a really bad inflation shock in the U.S.,

then rates are either going to stay where they are, or

expectations for cuts will come back."

Minutes from the Fed's last policy meeting are due later in

the day.

In Central Eastern Europe, most currencies were subdued with

Hungary's forint down 0.2% a day after its central

bank cut its base rate by another 50 basis points.

South Africa's rand depreciated 0.5% against the

dollar after data showed headline consumer inflation slowed for

the second month in a row in April.

The local stock index was flat with general

elections scheduled to be held next week.

Chinese shares had a muted close while the

yuan was last at 7.23 per dollar, hovering near a

three-week low.

China's central bank has guided some commercial banks to

accelerate the pace of lending in May, four sources with

knowledge of the matter said, after broad credit growth in April

hit a record low.

Elsewhere in emerging markets, Indonesia's central bank held

interest rates unchanged, as expected. The rupiah was

last at 15990 per dollar.

HIGHLIGHTS:

** China's ultra-long special bonds surge on exchange debut,

triggering suspensions

** Vietnam lawmakers elect top policeman as country's new

president

** Polish wages rise 11.3% y/y in April, below forecast

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