By Ankika Biswas

Sept 19 (Reuters) -An index for emerging market stocks jumped 1% and the currencies index hit a record high on Thursday, as a larger-than-usual overnight U.S. interest rate cut saw investors piling into risk assets, while Brazil delivered its first rate hike in two years.

The U.S. dollar edged lower after the Federal Reserve on Wednesday delivered a half-percentage-point reduction in its benchmark interest rate, which gives EM central banks more scope to ease further to support domestic growth.

The MSCI index for EM stocks .MSCIEF climbed 1%, after snapping a four-day winning streak in the previous session, while the currencies index .MIEM00000CUS defended its record-high level.

Chinese stocks rose on hopes that the start of the U.S. easing cycle will give Beijing policymakers more room to stimulate the ailing Chinese economy. The blue-chip CSI300 .CSI300 and Shanghai Composite indexes .SSEC rose to near two-week highs.

A Reuters poll showed China is widely expected to trim its main policy and benchmark lending rates on Friday, while Hong Kong cut its base rate charged via the overnight discount window by 50 basis points. Hong Kong's monetary policy moves in lock-step with the U.S. as its currency HKD=D3 is pegged to the greenback in a tight range of 7.75-7.85 per dollar.

Most Gulf central banks also cut their key rates, tracking the Fed's move, which along with strong oil prices boosted their stock markets.

Saudi Arabia cut its repurchase agreement rate and reverse repo rate by 50 bps each and the United Arab Emirates reduced its base rate on the overnight deposit facility by half a percentage point.

"The (Fed's) 'dot plot' indicates a long-term level of 3% is being targeted, whereas the latter will be data dependent," said Enrique Diaz-Alvarez, chief economist at global financial services firm Ebury.

"This move opens the way to a generally weaker dollar and offers welcome relief in particular to emerging market currencies that have struggled so far this year."

However, the big question remains - whether the Fed has kicked off its rate-cutting cycle in time to keep the world's largest economy from slowing too rapidly.

Pakistan's benchmark share index .KSE hit a record high, climbing nearly 2%, on expectations of further substantive monetary easing to spur economic growth.

The Bank of England, South Africa and Turkey's interest rate verdicts are all scheduled for Thursday. While South Africa is widely expected to cut rates for the first time in over four years, Turkey is seen holding rates steady.

The rand ZAR=D3 gained 0.6% against the dollar, and the benchmark stocks index .JTOPI jumped 1% to an over two-week high.

Elsewhere, Brazil kicked off a rate-hiking cycle on Wednesday with a 25 basis-point increase, as expected, and signalled more increases ahead.

Reporting by Ankika Biswas in Bengaluru; Editing by Sharon Singleton

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