* EM stocks hit record high, FX flat

* Asia's factory activity expands in May

* Investors hope for end to US-Iran war

By Niket Nishant

June 1 (Reuters) - Emerging market stocks climbed to an

all-time high on Monday, kicking off the month on a strong

footing, as investors cheered manufacturing activity in Asia and

held out hopes of a deal to end the Middle East conflict.

The MSCI index of EM stocks rose 1.4%, with

tech-heavy bourses in Taiwan and South Korea

climbing to a record.

A deluge of manufacturing data showed that Asia's factory

activity expanded steadily in May, helped by some stockpiling,

as companies attempted to get ahead of supply shocks stemming

from the U.S.-Iran war.

The strong print allayed fears of a potential hit from

higher oil prices, which have eased over the last few weeks but

remain well above pre-war levels.

"The strength of the manufacturing sector suggests that the

region is continuing to shrug off the big jump in global energy

prices," said Gareth Leather, senior Asia economist at Capital

Economics.

"The main reason for this is the ongoing surge in global

demand for electronics."

In South Korea, shares of Samsung Electronics ( SSNLF )

and LG Electronics jumped nearly 10% and 30%,

respectively, as expected meetings between Nvidia's ( NVDA ) CEO

Jensen Huang and Korean executives boosted hopes of tie-ups in

AI and robotics.

Investors are also holding out hopes for an end to the war -

which has now lasted over three months - despite intermittent

setbacks and strikes that have at times threatened to derail

diplomatic efforts toward a peace deal.

The emerging market currencies gauge was

flat. The dollar index was also little changed.

"FX markets are looking fatigued with the Gulf story.

Weekend news of the U.S. and Iran still negotiating a peace deal

while exchanging limited military fire has so far had little

effect," said Chris Turner, global head of markets at ING.

POLISH STOCKS DIP, TURKISH EXPORTS GROW

The Polish equity index fell 0.72%. Economic growth

in the first quarter of 2026 was slightly stronger than

initially estimated, the statistics office said on Monday.

Last month, the central bank governor indicated that rate

hikes were probable, though not certain, and that the bank would

bide its time to assess the outlook.

Turkish stocks rose 1.1% after a business survey

showed that the country's manufacturing sector neared

stabilisation in May, and export orders rose for the first time

in 21 months.

Shares of steel pipe maker Borusan Boru rose 9.9%

and was the top gainer on the benchmark index, after its unit

received orders totalling $742 million.

Later in the day, focus will shift to Latin America, another

corner of the emerging market universe, where economic data and

political developments will be on investors' radar.