* J.P. Morgan lifts view on Sri Lanka and the Philippines

* South Africa annual inflation rises to 4.5% in May

* South Korea shares extend gains, lifted by SK Hynix

reaching all-time high

By Avinash P and Ragini Mathur

June 17 (Reuters) - Most emerging-market stocks edged higher

on Wednesday, with MSCI's benchmark index hovering near record

highs, while currencies were muted as investors awaited a

Federal Reserve policy decision and weighed details of a Middle

East peace deal.

MSCI's emerging-market equities index edged 0.3%

higher, while its currencies' gauge was little

changed.

The Fed is expected to leave interest rates unchanged in its

first policy decision under Chairman Kevin Warsh, even as

elevated energy prices sharpen inflation concerns and push more

policymakers toward a hawkish stance.

The dollar index held firm ahead of the announcement,

keeping pressure on most emerging-market currencies.

Market participants remained cautious as they parsed the

limited details of a U.S.-Iran framework, looking for signs of

how quickly the agreement could reduce risks around the Strait

of Hormuz and global energy supplies.

"The (Strait of) Hormuz normalization should take time,

while inventories are lower now and the details of the agreement

are still limited," said Florian Ielpo, head of macro at Lombard

Odier Investment Managers.

"For now, markets are still trading on the perspective of a

deal, which means they are still buying what remains something

closer to a rumor than to the actual news itself."

South Korea's Kospi, the largest component in MSCI's

EM index, rose 1.7%, reversing early losses to notch a fifth

straight advance, as chipmaker SK Hynix jumped 5.8%

to an all-time high. Equities in China and

India also climbed.

J.P. Morgan upgraded its view on Sri Lanka and the

Philippines to market weight from underweight. The brokerage

said it expects EM Asia, especially oil importers, to lead a

near-term relief rally after the peace deal.

In South Africa, headline consumer inflation rose less than

expected in May, quickening to 4.5% from a year earlier from

4.0% in April.

"Inflation now looks set to follow a slightly lower path

than the SARB had forecast and the odds of a July hike

materializing have widened," said William Jackson, chief

emerging markets economist at Capital Economics.

South African stocks were flat, while the rand

edged marginally lower.

Turkey's benchmark stocks gauge edged 0.3% lower,

while the country's currency was flat.

In central Europe, currencies were mostly steady against the

euro, but Hungary's forint slipped 0.6%.

Despite Wednesday's slip, the forint is up 8.9%

year-to-date, making it one of the strongest performers in the

region.

Regional stocks were mixed, with the Romanian benchmark

advancing 0.8%, while Hungary's index fell 0.4%.

Polish stocks edged 0.2% higher.

HIGHLIGHTS:

** Bank Indonesia to raise rates again on June 18

** Thai industrial sentiment falls for the third straight month

in May

** China's FX deposits hit record high despite yuan strength

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