EMERGING MARKETS-Taiwan, S.Korea stocks hit record highs ahead of Fed's rate verdict

By Sameer Manekar

Sept 16 (Reuters) - Taiwan and South Korea shares touched record highs on Tuesday, driving emerging Asian equities to a four-year peak, buoyed by hopes that the U.S. Federal Reserve will resume its easing cycle and signal room for further interest rate cuts on Wednesday.

The MSCI Asia EM equities index .MIMS00000PUS jumped 1% to its highest since July 2021, while a gauge tracking stocks in ASEAN countries .MISU00000PUS, dominated by Singapore, Malaysia, and Indonesia, hovered around its early 2020 levels.

Global stock markets have been buoyant over the past few sessions as investors scoop up risk assets ahead of the expected Fed rate cut. Investors will be paying close attention to the central bank's language on the economic outlook and inflation, for clues on its next steps.

Futures have already begun factoring in 127 basis points worth of cuts by the Fed by next July. 0#USDIRPR

"We see several factors supporting the ongoing rerating of these inexpensive Asian markets," said Desh Peramunetilleke, head of quantitative strategy at Jefferies, Hong Kong.

"Some of the key factors include a weaker U.S. dollar, the upcoming U.S. rate cuts, and country-specific catalysts."

Taiwan's benchmark gauge .TWII advanced 1% to scale a record peak, led by a 2% rise in top contract chipmaker, TSMC 2330.TW, while South Korea's KOSPI index .KS11 extended gains into its 11th consecutive session, its longest since September 2019, to a life-time high.

In Southeast Asia, Indonesian shares .JKSE erased early gains to trade slightly lower in late hours, while the rupiah IDR= firmed a touch to 16,360 per dollar, its best in a week.

Stocks in Thailand .SETI extended gains into their eighth straight session to touch a seven-month high, while the baht THB=TH edged higher.

Singapore's FTSE Straits Times .STI edged lower but remained anchored around its record-high levels, while its dollar SGD= firmed slightly to a near eight-week high. Equities in the Philippines .PSI jumped 1.5%, while the peso PHP= edged up marginally.

"ASEAN remains well placed for global monetary easing, though the scope and pace of such easing will vary across ASEAN depending on differing domestic conditions," said Kenneth Tang, a senior portfolio manager at Amova Asset Management.

Emerging Asian currencies firmed against the U.S. dollar. Taiwan's dollar TWD=TP appreciated the most in six weeks, while Indonesia's rupiah IDR= touched a one-week high. South Korea's won KRW=KFTC also edged up to snap a four-day losing streak.

Markets in Malaysia .KLSE, MYR= were closed for a public holiday.

HIGHLIGHTS:
** Yields on Indonesia's 10-year government bonds ID10YT=RR at 6.335%
** Bank Indonesia and Taiwan's central bank to hold rates this week - Reuters poll
** Japan's Nikkei .N225 notches fresh record; Bank of Japan seen raising interest rates - Reuters poll
** China fires water cannon at Philippine ships in South China Sea

** Thai c.bank chief: baht strength driven by weaker dollar; rate cuts not affecting baht