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By Rajasik Mukherjee

June 29 (Reuters) - Asian markets were choppy on Monday as investors weighed AI-driven growth against rising cost pressures, while South Korea's sweeping investment push into chips and AI steadied sentiment after recent losses and a fragile U.S.-Iran ceasefire.

The MSCI EM Asia gauge .MIMS00000PUS inched higher and the index tracking ASEAN stocks .MISU00000PUS advanced 0.6%. Both indexes hit a two-week low in the previous session.

Equity markets moved unevenly, reflecting investor caution over stretched AI-driven rallies, particularly in South Korea and Taiwan, and lingering uncertainty about how rising costs could filter through the sector.

South Korea's KOSPI .KS11, which lost 7% last week, shed as much as 3.4% earlier in the session on Monday,

However, it pared much of its losses, ending 0.2% lower, after South Korea rolled out sweeping chip and AI mega-projects, with investments worth more than $576 billion over several years.

With the AI investment cycle becoming increasingly capital intensive, "investors are likely to question whether demand for AI chips and data centre capacity can continue growing fast enough to justify such aggressive spending," said Lukman Leong, an analyst at Doo Financial Futures, a brokerage.

Stocks in Taiwan .TWII gained as much as 2.1%. The index has risen about 56% so far this year and is the second-best-performing market in the region behind the KOSPI's nearly 100% rally.

In Southeast Asia, Thailand's stock index .SETI rose 1.7%, driven mainly by electronic products manufacturer Delta Electronics Thailand's DELTA.BK 5% gains on Monday. The firm, which counts Nvidia as a client, has surged 84% this year.

Globally, the U.S. and Iran traded fresh strikes over the weekend before they agreed to stop their tit-for-tat attacks and meet in Qatar on Tuesday, leaving investors nervous about a fragile ceasefire.

Malaysian shares .KLSE shed 0.4%. Equities in Jakarta .JKSE slid 1% and were set for their worst June since 2015. The index was also tracking its sixth consecutive month of declines, with losses of about 4.7% in June.

The dollar index =USD was steady around 101.34, supported by lingering geopolitical uncertainty and rising prospects of a Federal Reserve rate hike this year.

"Across EM Asia, regional currencies are broadly stable, with the lack of a sustained spike in oil prices easing pressure on net energy importers such as India, Thailand, and the Philippines," added Leong.

"The relatively muted market reaction also reflects expectations that any Middle East conflict will remain contained, allowing investors to refocus on domestic fundamentals."

The Malaysian ringgit MYR= led gains, rising more than 0.6% to 4.057 per dollar, touching its highest point in nearly two weeks. The Indonesian rupiah IDR= advanced to 17,850 per dollar.

The Philippine peso PHP= and the Thai baht THB=TH were largely flat. The South Korean won KRW=KFTC fell 0.4%, the Taiwanese dollar TWD=TP inched 0.2% lower.

Elsewhere, the Bolivian government said on Friday that the country would adopt a flexible exchange-rate system, effectively devaluing its currency by ending a 15-year dollar peg, in a major policy shift aimed at restoring economic stability.

HIGHLIGHTS:

** Yield on Indonesia's 10-year bonds ID10YT=RR at 7.182%

** China's central bank offers 300 billion yuan in new overnight reverse repos

** Indonesia Stock Exchange shareholders approve CEO appointment

** Venezuela quake death toll nears 1,500 as rescue work goes on

** Thai lawmakers begin debate on $115 billion budget for 2027

Asia stock indexes and currencies at 0704 GMT
COUNTRY	FX RIC	FX DAILY %	FX YTD %	INDEX	STOCKS DAILY %	STOCKS YTD %
Japan	JPY=	-0.04	-3.18	.N225	0.15	38
China	CNY=CFXS	+0.07	+2.87	.SSEC	1.02	2.51
India	INR=IN	+0.08	-4.72	.NSEI	-0.34	-8.25
Indonesia	IDR=	+0.31	-6.61	.JKSE	-0.93	-32.45
Malaysia	MYR=	+0.69	-0.02	.KLSE	-0.32	-1.06
Philippines	PHP=	+0.16	-3.85	.PSI	0.68	1.00
S.Korea	KRW=KFTC	-0.43	-6.68	.KS11	-0.20	99.20
Singapore	SGD=	+0.02	-0.56	.STI	0.16	11.92
Taiwan	TWD=TP	-0.08	-1.40	.TWII	0.96	55.37
Thailand	THB=TH	+0.08	-5.54	.SETI	1.75	24.58