* MSCI EM stocks soar 6.6%, FX up 0.3%

* KOSPI records worst month in 18 years

* Poland's July inflation in line with expectations

By Utkarsh Hathi

July 31 (Reuters) - Emerging market stocks were heading on

Friday for their biggest single-day jump since the 2008

financial crisis after a relief rally in Asian chipmakers, while

currencies were mixed against a steady dollar.

MSCI's global EM equities index climbed 6.6%,

rebounding from a three-month low but stayed on track for

monthly losses.

A rebound in global tech stocks lifted market sentiment,

with Wall Street's Nasdaq rising 2.8% overnight, led by

a surge in shares of Microsoft ( MSFT ) that boosted its stock

value by $450 billion.

Wild swings in South Korea's chip-heavy KOSPI have

sent emerging market equities on a rollercoaster ride in recent

weeks, as investors switched from enthusiasm at the AI boom to

concerns that higher valuations and spending may not generate

returns.

The KOSPI soared 18%, though it saw its worst month since

October 2008, while Taiwan's tech-heavy advanced 8%.

Uncertainty over the Federal Reserve's policy path has also

returned to the spotlight this week after Chair Kevin Warsh

offered little guidance on the outlook for interest rates.

Markets now price a 63% chance of a September rate hike,

according to CME Group's FedWatch tool.

"Our expectation is for the Fed to undershoot market

expectations on rate hikes," said Nick Rees, head of macro

research at Monex.

"We expect to see some of the downside pressure removed that

could have otherwise weighed on emerging market FX, so we see

the dollar slipping and emerging market currencies specifically

benefiting from that dynamic."

The MSCI global EM currencies gauge rose

0.3%, and looked set to end the month up 2%.

Barclays analysts noted that inflows in EM bond funds slowed

in the week, while fund flow momentum in equities stayed

strong.

Investor sentiment in emerging Europe was mixed, with Polish

stocks gaining 0.5%, while Hungarian benchmark and

energy-laden Romanian equities slipped 0.2% and 0.3%,

respectively.

Equities in Poland and Hungary have been supported by easing

inflation and rate cuts from central banks recently.

Poland's July inflation was in line with expectations, data

showed on Thursday. The Polish zloty edged 0.2% lower

against the euro, and Hungarian forint slipped 0.8%.

The broader Central and Eastern Europe equities

also rose to stand 8% up for the month,

outperforming broader EM stocks weighed down by higher crude

prices after renewed escalation in the Middle East.

Oil prices were heading for their first monthly gain in

four, though they eased 0.2% on Friday as traders weighed signs

of growing supplies after Saudi Arabia said it would lead a

coalition to boost defence cooperation on key maritime

chokepoints.

Asian currencies were mixed against the dollar, while South

Africa's rand was muted.

The Turkish lira slipped 0.3%.

HIGHLIGHTS:

** China's factory activity shrinks in July as demand falters,

fuelling slowdown concerns

** Indonesia's trade deficit likely narrowed in June to $790

million

** Drone strike at Egypt port near Suez Canal ignites new

shipping risks

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