* EM stocks, FX gain but eye weekly declines

* TSMC-driven chip rally boosts Taiwan's index

* IMF board set to meet for Ghana review

* Moody's revises Egypt outlook to 'negative'

Jan 19 (Reuters) - Emerging market stocks and currencies climbed on Friday after a boost from assets in Taiwan and South Korea, but were set for sharp weekly declines due to fading optimism around interest rate cuts from the U.S. Federal Reserve.

MSCI's index for emerging market (EM) equities gained 1% by 0919 GMT, rising for the second day in a row.

However, the index was set for a weekly drop of 2.5% - the steepest in three months.

A gauge of regional currencies advanced 0.2% but was also on track for weekly declines as signs of resilience in the U.S. economy and pushback from central bankers against early rate cuts lifted the dollar.

Equities in Taiwan outperformed peers with a 2.6% gain which was driven by a rally in shares of the world's biggest contract chipmaker, TSMC, following a bullish revenue outlook.

South Korea's semiconductor-heavy KOSPI index also advanced 1.3%.

"We are quite bullish on the semiconductor cycle and the fact that that's already bottomed," said Kevin Ross, senior portfolio manager of international equities at Vaughan Nelson.

"That means (South) Korea and Taiwan should do quite well this year as you start to see a restocking as well as an uptick in consumer demand in developed markets."

The Taiwan dollar rose 0.6% while the South Korean won inched up 0.5% against the dollar on Friday.

Evidence of patchy economic recovery in China and disruptions to Red Sea shipping have kept investors risk-averse this week. Hong Kong stocks have been particularly hard hit, slumping 5.8% this week.

Among other currencies, the South African rand was muted at 18.9366 against the dollar and on track for a weekly decline of 1.7%.

Currencies in central and Eastern Europe were also set to end the week down. The Hungarian forint underperformed peers this week, dropping 1% on prospects of accelerated rate cuts amid easing inflation.

In other news, global ratings agency Moody's revised its outlook on Egypt to "negative" from "stable" on Thursday, citing increasing risks that the country's credit profile will continue to weaken.

The International Monetary Fund (IMF) executive board is set to meet later in the day to sign off a review of Ghana that is expected to release a $600 million tranche.

HIGHLIGHTS

** TSMC shares jump 6.5% to 11-month high

** Ghana's cedi firms slightly ahead of IMF meet

** cbank decisions next week: Turkey, Sri Lanka, South Africa

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(Reporting by Amruta Khandekar;Editing by Elaine Hardcastle)