South Korea, Taiwan stocks lift emerging markets on Fed rate outlook

• CME's FedWatch Tool shows 80.9% chance of December rate cut
• Asian currencies see marginal appreciation on U.S. rate outlook
• Fed's Waller cites weak labour market for rate-cut support

By Sneha Kumar

Nov 25 (Reuters) - Most emerging market equities advanced on Tuesday, led by South Korea and Taiwan stocks, as several U.S. Federal Reserve officials signalled support for a potential interest rate cut in December, raising market bets of upcoming monetary easing.

The MSCI Emerging Asia Index .MIMS00000PUS climbed 0.9%, extending its advance for a second session. Seoul's benchmark .KS11 edged 0.1% higher, while Taiwan's .TWII and Thailand's .SETI benchmark indexes each gained 1.1%.

Asian market momentum has strengthened over the past two days as U.S. Fed officials voiced backing for policy easing next month. Fed Governor Christopher Waller said the current soft labour market warrants another quarter-point rate cut in December.

Lower borrowing costs in the world's largest economy typically benefit open emerging-Asian economies, giving their central banks more room to reduce domestic interest rates.

"If the Fed does cut in December, it would symbolically support the relative ease towards the market's perceived terminal Fed funds rate of 3%," said Chris Weston, head of research at Pepperstone.

"Holding rates steady in December, at a time when the labour market is fragile and both short- and long-term U.S. inflation expectations are falling, would be a disconnect that likely wouldn't sit well with the market."

In Southeast Asia, stocks in Jakarta .JKSE slipped nearly 1% from their record-high levels touched on Monday. The benchmark index in the Philippines .PSI rose as much as 0.7% to its highest level since late-October.

Late on Monday, Bangko Sentral ng Pilipinas' governor Eli Remolona, Jr said that inflation expectations in the country were "more or less anchored" and he was pleased that consumer price increases has averaged below their target level over the year.

Singapore's benchmark index .STI fell 0.4%, following a surprise uptick in the city-state's core inflation for October.

Following the data release, Bank of America analysts now expect the Monetary Authority of Singapore to start normalisation as early as April instead of October 2026.

Asian currencies posted marginal gains, with the Malaysian ringgit MYR= and Indonesian rupiah IDR= up about 0.2% each, while the Philippine peso PHP=, Singapore dollar SGD= and Thai baht THB=TH were little changed.