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By Shruti Agarwal

June 12 (Reuters) - Asian chipmakers surged on Friday and broader equities rallied, as risk appetite returned on hopes that a Middle East peace deal may finally materialise, while Indonesia's rupiah was set to log its first weekly gains in nearly three months.

Currencies in the region tracked higher against the U.S. dollar on the day as the greenback =USD tumbled, 10-year Treasury yields US10YT=RR slid, and oil prices eased overnight.

South Korea's won KRW=KFTC appreciated as much as 1% to 1,517, while the Indian rupee INR=IN jumped 0.6% to 95.193 a dollar. An MSCI gauge of global EM currencies .MIEM00000CUS rose 0.4%, and was on track to end the week 0.3% in green.

Equities, particularly the AI-heavy gauges in South Korea and Taiwan, soared on the hopes of a Middle East peace deal after U.S. President Donald Trump said a deal could be signed as soon as this weekend.

South Korea's KOSPI .KS11 surged as much as 8.5%, triggering a 'sidecar' trading curb for the fourth time this week. The KOSPI volatility index .KSVKOSPI climbed to a record high of 91.94 on Friday from mid-70s on Monday.

Chipmakers Samsung Electronics 005930.KS and SK Hynix 000660.KS jumped 11% and 8%, respectively, on Friday. Samsung Electronics was headed for its 11th consecutive weekly gain.

Taiwan's stocks .TWII also advanced 2.4% on the day, although they were on track to end the week about 2% in the red.

In Indonesia, stocks .JKSE resumed their rally that was sparked by the off-cycle rate hike, boosting major lenders. The benchmark gauge advanced more than 2% on the day and was on track to add over 6% for the week.

Bank Central Asia BBCA.JK and Bank Negara Indonesia BBNI.JK gained more than 2% each on Friday and were set for bumper weekly gains.

The banking sector rally is heavily driven by expectations of expanded margins, Ernest Chew, head of ASEAN Equities at BNP Paribas, said.

"The rate hike signals that the central bank is aggressively committed to defending currency stability and curbing inflation, which provides institutional investors with a more predictable macroeconomic backdrop to confidently bid up heavy-weight banking equities," Chew said.

However, he warned that sustaining an upward trajectory for Indonesian equities will be an uphill battle, given the broader confidence shocks weighing on local assets.

The rupiah also resumed its relief rally, strengthening to as much as 17,885 per dollar. It was last trading at 17,910, clocking its first weekly gain since late March.

Elsewhere, the Malaysian ringgit MYR= appreciated to the 4.0550 mark, but was on track to end the week in the red, having fallen more than 2% in the past two weeks.

Kausani Basak, an FX Analyst at ANZ, attributed the ringgit's recent weakness to domestic factors, including political risks associated with state elections, and high subsidy payments pressuring fiscal balances.

HIGHLIGHTS:

** Indonesia's Danantara unit raises $1.5 billion in debut dollar bond

** Danantara COO says new DSI unit will oversee exports, but will not itself take over exports

** Indonesian resource stocks rose: Amman Mineral up 8.8%, Dian Swastatika Sentosa up 6.2%

** Thai central bank chief says policies must protect economy from shocks

** Singapore fuel oil stocks fall to nearly 8-year low

Asia stock indexes and currencies at 0434 GMT
COUNTRY	FX RIC	FX DAILY %	FX YTD %	INDEX	STOCKS DAILY %	STOCKS YTD %
Japan	JPY=	-0.19	-2.23	.N225	3.39	28.09
China	CNY=CFXS	+0.13	+3.32	.SSEC	1.56	2.03
India	INR=IN	+0.51	-5.67	.NSEI	0.92	-10.54
Indonesia	IDR=	+0.36	-6.92	.JKSE	2.68	-30.11
Malaysia	MYR=	+0.20	+0.00	.KLSE	0.09	0.05
Philippines	PHP=	+0.27	-3.29	.PSI	-	-2.36
S.Korea	KRW=KFTC	+0.72	-5.34	.KS11	8.52	99.94
Singapore	SGD=	-0.08	+0.09	.STI	0.39	7.78
Taiwan	TWD=TP	-0.11	-0.72	.TWII	2.53	52.74
Thailand	THB=TH	+0.03	-4.12	.SETI	0.87	25.91