* MSCI EM FX down 0.5%, stocks shed 1.3%

* Hungarian forint set for biggest daily fall in a month

* Indonesian rupiah falls below 17,500/dollar for the

first time

* US inflation report awaited later in the day

By Purvi Agarwal

May 12 (Reuters) - Emerging market stocks eased from

record highs on Tuesday as investors held off from placing more

bets on artificial intelligence-linked euphoria, and currencies

slipped amid fading hopes of a U.S.-Iran peace deal.

U.S. President Donald Trump said a ceasefire with Iran was "on

life support" as Tehran rejected a U.S. proposal to end the

conflict and stuck to a list of demands Trump described as

"garbage", sending oil prices up 2%.

All eyes are on Trump's meeting with Chinese President Xi

Jinping later this week, with trade and Iran among the agenda

items.

"The recent stalemate would likely play favourably for

China... it can be seen as a peacemaker and try to gain some

concessions on Taiwan," said Mohit Kumar, an economist at

Jefferies.

"The market needs to focus on differentiation between

regions, sectors, and companies in the (realistic) scenario that

oil is 25-30% higher than pre-war levels."

MSCI's global EM stock index retreated 1.3% from a

record high, with no AI-exposed Asian bourses to support the

momentum.

South Korea's Kospi fell 2.3% as investors booked

profits. Analysts also pointed to comments from a presidential

policy advisor, floating the idea of "citizen dividends" -

excess AI earnings to be redistributed to all citizens.

Currencies in the Middle East-reliant Asian economies were

heavily hit, with Indonesia's rupiah falling below 17,500

a dollar for the first time and India's rupee hitting a

record low.

The risk-off mood spilled over to other EMs, with stocks in

Poland down 1.9% and Hungary shedding 0.4%.

Romanian stocks were up 0.8% at record highs, boosted by

robust gains in Premier Energy.

Romania's leu has been languishing at record lows

since last week when a no-confidence vote toppled the

government. A potential political deadlock could put EU funds

and Romania's credit ratings at risk.

Hungary's forint weakened 0.6% against the euro,

set for its steepest one-day decline in over a month.

MSCI's gauge tracking EM currencies dipped 0.5%.

A U.S. inflation report later in the day could influence bets on

a Federal Reserve interest rate cut, and the dollar.

Turkey's lira was little changed, while its

stocks fell 0.5%.

South Africa's rand depreciated 0.7% while its stocks

lost 1.7% as prices of gold - among the country's top

exports - fell.

President Cyril Ramaphosa faced down calls to resign on Monday

over a scandal where cash in foreign currency was stolen from

his ranch, but analysts expect him to survive impeachment if it

went to a vote in the parliament.

HIGHLIGHTS:

** Stung by Iran war, Trump heads to China in need of wins

** Emerging market investors shrug off Iran war shock, IIF data

shows

** Russia downgrades 2026 economic growth forecast to 0.4% from

1.3%, deputy PM says

For TOP NEWS across emerging markets

For CENTRAL EUROPE market report, see

For TURKISH market report, see

For RUSSIAN market report, see