* AI leads stocks higher, SK Hynix not far from $1 trln

market cap

* Dollar stands tall on rate hike wagers, safe-haven

demand

* Oil above $100/barrel as Iran war impasse weighs

* Trump-Xi meeting likely to dominate investors thoughts

By Ankur Banerjee

SINGAPORE, May 14 (Reuters) - Stocks rose on Thursday,

powered by AI fervour that pushed South Korea's SK Hynix to the

brink of joining the trillion-dollar club, while the spotlight

was firmly on a high-stakes summit between U.S. President Donald

Trump and China's Xi Jinping.

Trump heads into a series of meetings with China's Xi in

Beijing, aiming to secure economic wins, maintain a fragile

trade truce and navigate flashpoints such as the Iran war and

arms sales to Taiwan.

Michael Strobaek, global chief investment officer at Lombard

Odier, said preserving the status quo may be the most a meeting

between Trump-Xi meeting can achieve.

"I think that, amid the uncertainties around the Middle East

ceasefire, that may be enough for now," said Strobaek, noting

expectations are low and groundwork for any major diplomatic

breakthroughs appears thin.

STOCKS FLY ON AI

In stocks, MSCI's broadest index of Asia-Pacific shares

outside Japan rose 1.2%, hovering near the

record-high hit last week.

Japan's Nikkei was perched at a new all-time peak

with data showing AI-linked demand partly helped lift earnings

for Japanese firms. Seoul's KOSPI was 1.7% higher,

taking its gains so far for 2026 to an eye-watering 88%.

SK Hynix, one of the AI darlings in Asia, is on

the verge of breaking through $1 trillion market cap, becoming

the second South Korean firm after Samsung to break into the

trillion dollar club. SK Hynix stock is up over 200% this year.

European futures pointed to a strong open while

U.S. stock futures was up 0.23%.

Analysts though caution that the elevated oil prices and the

impasse in negotiations to end the war in the Middle East could

bring inflationary worries back into view.

"Markets are trying to run two playbooks at once: AI and

earnings says buy growth, but geopolitics and energy priced are

quietly re-writing the inflation trajectory in the background,"

said Charu Chanana, chief investment strategist at Saxo.

"While today's session may still follow the AI momentum, a

macro reality check remains likely from the Trump-Xi meeting."

Brent crude futures were little changed at $105.76 a

barrel in early trading, while U.S. West Texas Intermediate

futures fetched $101.14 per barrel. Oil prices remain

well above the pre-war levels, fanning inflation worries

worldwide.

DOLLAR GETS A LIFT FROM INFLATION DATA

In currencies, the U.S. dollar was firmer as investors

wagered the Federal Reserve's next rate move would be a hike

after hotter-than-anticipated inflation reports this week.

U.S. producer prices posted their biggest gain since early

2022, following Tuesday's consumer price data that showed annual

inflation rose at its fastest pace in three years.

Higher inflation and stronger labour market data have led

some traders to price in the prospect of a potential rate hike

in the first half of next year even as many economists and

analysts continue to see a rate cut as the likely next move by

the U.S. central bank.

The euro bought $1.1716, near its lowest in a week.

Sterling was at $1.35282, leaving the dollar index

, which measures the U.S. currency against six others, at

98.458 in early trading.

The yen fetched 157.88 per U.S. dollar, keeping

traders wary of fresh Tokyo intervention after recent sharp

spikes that sources say were driven by officials stepping in to

prop up the battered currency.

The two-year yield was at 3.9708%, down 1.9 basis

points but near the 1-1/2-month high it hit in the previous

session. The benchmark 10-year yield stood at

4.4629%, having touched close to a one-year high on Wednesday.