EMERGING MARKETS-Asian FX steady, stocks surge as investors bet on US rate cut

(.) * South Korean stocks eye best day since May 7 * Taiwan stocks eye best day since April 24 * Inflation data awaited from Indonesia, Thailand and Philippines * Indian shares open at record highs By Poonam Behura June 3 (Reuters) - Asian currencies were largely steady on Monday, while stocks gained after U.S. inflation data showed prices had stabilised, helping crystalise market expectations of a Federal Reserve interest rate cut this year. The U.S. personal consumption expenditures (PCE) price index data - the Fed's preferred inflation measure - increased 0.3% in April, data showed on Friday, after gaining at the same pace in March. Another set of softer readings on U.S. data would give markets greater confidence in pricing in more Fed cuts, said Christopher Wong, a currency strategist at OCBC. "This in turn should support sentiment in Asian FX while USD trades on the back foot." The South Korean won advanced 0.6%, spearheading some modest gains in regional currencies. The currency was set for its biggest intraday gain in three weeks. The Indian rupee surged 0.6% and Taiwanese dollar also rose 0.3%. In China, Caixin data showed manufacturing activity grew at the fastest pace in two years in May, contrasting with a previous official survey showing an unexpected fall in manufacturing activity. The yuan was subdued at 7.2455 per U.S. dollar after the data. Stocks in Shanghai slipped 0.5%. Markets remained cautious ahead of a week full of inflation reading from emerging Asian economies, including Indonesia, Thailand and Philippines as the central banks in the region take a wait-and-see approach to any policy easing moves by the Fed. Traders are pricing in 53% chance of the Fed cutting rates in September and anticipate 37 basis points of easing this year. Among other equities, the Taiwanese and South Korean shares rose as much as 2% each in early trading, driven by a softer U.S. data on Friday. These indexes eyed their best sessions since April 24 and May 7, respectively. Indonesia's benchmark index also jumped 1.1%, as inflation eased more than expected in May and stayed within the central bank's target range. ING analysts had earlier said the Bank Indonesia (BI) "could be open to further tightening should IDR weakness persist and inflation trend closer to the top end of the central bank's 1.5-3.5% target." Meanwhile, stocks in India jumped 3.6% to hit record highs, a day before a crucial election outcome where the current Prime Minister Narendra Modi's government is widely expected to secure a third term. Markets in Thailand and Malaysia were closed for public holidays. HIGHLIGHTS ** Asian factory activity expands in May on robust global demand ** Japan's Q1 capex rises, suggesting upward revision to poor GDP ** Modi's alliance to win big in India election, exit polls project Asia stock indexes and currencies at 0354 GMT COUNTRY FX RIC FX FX INDEX STOCKS STOCKS DAILY % YTD % DAILY YTD % % Japan -0.04 -10.3 <.N22 0.90 16.65 6 5> China -0.04 -2.04 <.SSE -0.51 3.23 C> India +0.60 +0.29 <.NSE 3.58 7.39 I> Indonesia +0.19 -5.06 <.JKS 1.06 -3.14 E> Malaysia - -2.42 <.KLS - 9.76 E> Philippines +0.08 -5.37 <.PSI 0.37 0.11 > S.Korea +0.57 -6.44 <.KS1 1.94 1.22 1> Singapore +0.03 -2.33 <.STI 0.41 3.40 > Taiwan +0.28 -4.89 <.TWI 1.89 20.33 I> Thailand - -7.16 <.SET - -4.96 I> (Reporting by Poonam Behura and Adwitiya Srivastava in Bengaluru; Editing by Rashmi Aich)