HONG KONG, May 21 (Reuters) - China stocks edged higher on Thursday, joining a broader rally in the region, as hopes of a U.S.-Iran peace deal lifted risk appetite, while Nvidia's stellar earnings boosted chip shares.

** China's blue-chip CSI300 index .CSI300 was up 0.6% by the lunch break, while the Shanghai Composite index .SSEC was flat at 4,162.37 points.

** In Hong Kong, the benchmark Hang Seng Index .HSI was largely flat at 25,648.28.

** U.S. President Donald Trump said on Wednesday that negotiations with Iran were in the final stage, suggesting he was prepared to wait a few days to "get the right answers" from Tehran, but also warned of renewed attacks if it did not agree to a deal.

** "The easing of the U.S.-Iran conflict and the drop in oil prices may boost market sentiment and drive a rebound in equity indices," analysts at Nanhua Futures said in a note.

** Meanwhile, tech optimism boosted by Nvidia's NVDA.O blockbuster growth could continue driving out-performance in small- and mid-cap indexes, they said.

** The semiconductor sector surged before pulling back. The CSI All-Share Semiconductor Products and Equipment Index .CSIH30184 rose as much as 3.2% to a record before turning lower 0.4% by midday break.

** Chip maker Naura Technology 002371.SZ hit the daily 10% limit-up and notched a record high before closing the morning session up 6.1%.

** "Against a backdrop of ample liquidity and broadly improving earnings, our strategy is to focus on high-quality growth and selective stock-picking," said Xiaoning Zhang, China equity strategist at J.P. Morgan.

** "From a broad market perspective, we remain positive and optimistic," she said, forecasting a year-end target of 5,200 for the CSI 300 Index in the base case.

** Around the region, MSCI's Asia ex-Japan stock index .MIAPJ0000PUS was firmer by 2.86%, while Japan's Nikkei index .N225 was up 3.72%.