Nov 15 (Reuters) - Emerging market stocks hit two-month highs on Tuesday, taking heart from a positive tone in talks between the United States and China, while a weakening dollar buoyed currencies of developing countries.

Chinese shares led gains with Hong Kong's benchmark stock index up 4.1%, while Taiwan's main index jumped 2.6% as TSMC rallied 7.9% after Warren Buffet's Berkshire Hathaway Inc said it bought more than $4.1 billion of the chipmaker's stock.

MSCI's index of emerging market stocks was up 2%, having gained almost 15% since hitting 2-1/2-year lows in October.

Talks between U.S. President Joe Biden and China's leader Xi Jinping on Monday assuaged some fears of a further strain in ties, with the two leaders pledging frequent communication.

"Based on remarks from President Biden, his meeting with President Xi was relatively constructive. In the current tense global environment ... it's always encouraging when the leaders of the most powerful countries speak," said Piotr Matys, senior FX analyst at InTouch Capital.

"However, the U.S. Federal Reserve is still the main driving factor ... EM currencies are benefiting from growing market conviction that the Fed is likely to slow down the pace of tightening. Long USD positions are being reduced across the EM space."

Fed Governor Christopher Waller and Vice Chair Lael Brainard have signalled that the central bank may adopt smaller hikes after four 75-basis-point hikes. Waller, however, warned against assuming that the Fed was softening its stance on inflation.

Investors are increasingly expecting emerging market assets to fare better next year on hopes of peaking U.S. inflation and a likely weaker dollar. Wall Street banks are raising their outlook for emerging markets' hard-currency bonds.

MSCI's index of EM currencies was up 0.3%, hitting 2-1/2-month highs as the dollar slipped 0.7%. China's yuan rose 0.6%, while South Africa's rand hit two-month highs. Mexico's peso climbed 0.2%.

Keeping a lid on sentiment was data on Tuesday that showed China's economy suffered a broad slowdown in October as factory output grew slower than expected and retail sales fell for the first time in five months. China's strict COVID policy has hampered growth in the world's second largest economy this year.

While Beijing eased some curbs last week, rising number of cases have investors nervous.

Growth worries heightened in central Europe as well after preliminary data showed Hungary's economy contracted in the third quarter. For GRAPHIC on emerging market FX performance in 2022, see

http://tmsnrt.rs/2egbfVh For GRAPHIC on MSCI emerging index performance in 2022, see https://tmsnrt.rs/2OusNdX

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(Reporting by Susan Mathew in Bengaluru; Editing by Vinay Dwivedi)