By Rajasik Mukherjee

Dec 22 (Reuters) - Equities in Asian emerging markets kicked off the holiday-shortened week on a strong note on Monday, led by tech-heavy South Korea and Taiwan stocks, while those in Singapore climbed to a record on solid gains in heavyweight banks.

The AI boom has been a key driver of global equity markets this year, pushing several tech-heavy bourses to record highs and fuelling investor optimism across emerging markets.

"The AI bubble in emerging market equities, which drove much of this year's rally, hasn't burst yet and could inflate further next year," said Elias Hilmer, markets economist at Capital Economics.

Stocks in Seoul .KS11 gained as much as 2.1%, hitting their highest level since December 15, driven by major chipmakers Samsung Electronics 005930.KS and peer SK Hynix 000660.KS that jumped 4% and 6%, respectively.

South Korea's KOSPI .KS11 has gained a whopping 70% this year, driven by robust capital flows into AI-related stocks, placing it on track to log its best year since 1999.

In Taiwan, the benchmark gauge .TWII also rose as much as 1.7% to a six-session high, and is on track to end the year 22% higher. TSMC 2330.TW, the world's biggest contract chipmaker, is set to end the year 36% higher, its third consecutive year of gains.

In Southeast Asia, Singapore's FTSE Straits Times index .STI scaled a peak of 4,613.82 points. Top banks DBS Group DBSM.SI and OCBC OCBC.SI added around 1.3% each and hovered around their all-time highs, underscoring broad-based optimism beyond tech.

Among other equities, Philippine stocks .PSI rose 1%, while Thai stocks added 1.2%.

The baht THB=TH appreciated 0.5% to 31.220 per U.S. dollar, its strongest point since mid-June 2021, largely due to a fresh rally in gold. GOL/

Thailand, Southeast Asia's no. 2 economy, is a major gold trading hub, with its consumer demand for the metal ranking fourth in Asia and 10th globally.

A weak dollar, a current account surplus and gold trading have driven the currency's rise of around 10% against the dollar this year, which is seen as a threat to its exports and tourism industries.

The baht's strength reflected a mix of seasonal factors tied to tourism inflows, gold-related currency movements, given Thailand's role as a major consumer and re-exporter, and support from a resilient yuan, said Christopher Wong, a currency strategist with OCBC.

Wong said that a softer U.S. dollar and the Federal Reserve's easing bias have provided an additional tailwind for the currency.

Elsewhere, the Indonesian rupiah IDR= and the Philippine peso each slipped marginally.

Malaysia's ringgit .MYR= and stocks .KLSE traded largely flat. Data showed November inflation came in slightly below market estimates.

The Japanese yen hovered near record lows to the euro and Swiss franc as the lack of hawkish signals from the Bank of Japan emboldened traders. It also loitered around an 11-month trough against the U.S. dollar. USD/

HIGHLIGHTS:

** Japan will take 'appropriate' action against excessive yen moves, top currency diplomat says

** China leaves benchmark lending rates unchanged for seventh straight month

** Malaysia court denies ex-PM Najib's bid to serve jail sentence at home

(Reporting by Rajasik Mukherjee in Bengaluru; Editing by Harikrishnan Nair)

((Rajasik.Mukherjee@thomsonreuters.com))