* MSCI EM stocks hit record high on AI optimism

* MSCI EM FX set for sixth session of gains

* SK Hynix tops $1 trillion valuation, pushes KOSPI to

records

* South Africa rate decision awaited this week

By Avinash P and Purvi Agarwal

May 27 (Reuters) - MSCI's index tracking emerging market

stocks hit a record high on Wednesday, driven by gains in

tech-heavy Asian bourses, while currencies were mixed as

investors watched for developments in the Middle East.

The index tracking global EM stocks rallied 1.2%

to a record high, putting it on track for a fifth session of

gains, its longest run since the Iran war started.

The rise was powered by a 2.3% jump in South Korea's KOSPI

, which extended its stay at record levels. Chipmaker SK

Hynix soared 9.3% to hit $1 trillion in market

valuation, while Samsung climbed 2.7% after workers agreed to a

wage deal.

AI-heavy Taiwanese stocks added 1.7%. Stocks in

Asian EMs, especially South Korea and Taiwan, have benefited

from a surge in appetite for AI, as investors overlooked the

region's reliance on Middle East energy, which can impact

inflation and economic growth.

Meanwhile, Iran said on Tuesday that the U.S. had violated a

ceasefire by striking targets near the Strait of Hormuz,

complicating efforts to end the war, while Israel pounded

Lebanon.

"Equities continue to find support in energy and secular

themes, but other asset classes are no longer benefiting from

ceasefire talks or the prospect of a settlement," said Geoff Yu,

EMEA macro strategist at BNY.

"Rising inflation expectations, and what they mean for rate

cuts, are weighing on bond markets... even as central banks lean

hawkish, FX carry trades are not seeing any benefit," Yu added.

MSCI's index tracking EM currencies was

muted, but on track for its sixth session of gains.

Most Asian currencies were little changed to higher against

the dollar, while China's yuan hovered near a

three-year high.

South Africa's rand gained 0.2%, while its stocks

were off 0.5%, tracking slight declines in gold prices.

The gold exporter is awaiting a central bank rate decision

on Thursday, where policymakers are widely expected to hike

rates by 25 basis points to 7%.

Meanwhile Russia's rouble appreciated 1.4% against

the dollar, over-the-counter market data showed.

Most currencies in emerging Europe were subdued to lower

against the euro, with Hungary's forint slipping 0.3%.

Hungary's central bank left its base rate steady at 6.25% on

Tuesday as expected, while flagging issues stemming from rising

energy prices. Local equities added 0.4%.

Stocks in Romania and Poland were up 0.1%

and 0.3%, respectively.

Markets in Turkey were closed on Wednesday for a holiday.

HIGHLIGHTS:

** IMF and Bangladesh discuss new program for reforms

** China's April industrial profits grow at fastest in more

than two years

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