EMERGING MARKETS-Asian stocks touch record highs as Fed rate-cut bets intensify

By Roushni Nair

Sept 11 (Reuters) - Most Asian shares extended gains on Thursday, with benchmark indexes in Japan, Taiwan, and South Korea scaling record highs as investor optimism intensified ahead of a widely anticipated U.S. Federal Reserve interest rate cut next week.

Taiwan's benchmark index .TWII rose as much as 1.4% to an all-time high of 25,541, driven by a 2.5% jump in chipmaker TSMC 2330.TW. South Korea's Kospi .KS11 also scaled a record peak, gaining 0.9%.

Both indexes marked record high levels for a second consecutive day, with South Korea on track for an eighth session of gains and Taiwan rallying for the seventh.

Japan's Nikkei .N225 also climbed to an all-time high of 44,251.65, echoing an overnight Wall Street rally. .N

Investor sentiment was buoyed by a surprise drop in U.S. producer prices, reinforcing expectations of a Fed rate cut next week. Traders are now pricing in a 92% chance of a 25-basis-point cut, with an 8% probability of a larger 50-bp move, according to CME Group's FedWatch tool. MKTS/GLOB

However, the equity euphoria contrasted with currency markets, where the Philippine peso PHP=, South Korean won KRW=KFTC, and Thai baht THB=TH led declines, each falling more than 0.3%.

The U.S. dollar index =USD traded marginally higher by 0.1% on easing bets and encouraging inflation signals. USD/

Singapore's STI .STI benchmark index was flat after hitting record levels in the previous session, while equities in Jakarta .JKSE and Bangkok .SETI rose more than 0.5%, each.

Traders now await the U.S. consumer price data, due later in the day, to firm up their rate-cut expectations.

Tech sentiment received an additional lift from Oracle Corp ORCL.N, whose upbeat cloud outlook added momentum to the sector, analysts at Bell Potter Research noted.

Meanwhile, the Taiwan dollar TWD=TP held firm and remains the region's top-performing currency this year, up more than 8%.

Analysts at Bank of America said that the currency's rally stalled in July and August due to equity outflows, but with Fed rate cuts largely priced in, Taiwan's record trade surplus and renewed equity inflows could fuel a second leg of gains.

In Indonesia, markets stabilised after the abrupt dismissal of Finance Minister Sri Mulyani Indrawati earlier this week.

Indonesia's 1-10 year bond spread widened above 120 bps this month, the highest since January 2023.

Stocks in Jakarta .JKSE advanced 0.8% and the Indonesian rupiah IDR= was flat.

The country may revise its $236 billion budget proposal for 2026, newly appointed Finance Minister Purbaya Yudhi Sadewa said late Wednesday.

HIGHLIGHTS:

** Thai consumer confidence falls in August

** Malaysia's July industrial production up 4.2% year-on-year