By Ankika Biswas

Oct 4 (Reuters) -Hong Kong shares logged a sharp weekly gain on Friday as investors continued to cheer China's stimulus measures, while emerging market currencies edged lower ahead of U.S. jobs data and on tensions in the Middle East.

Hong Kong's Hang Seng index .HSI climbed 3% to an over two-year high, after a bout of profit taking on Thursday following a six-day winning streak as sentiment remains upbeat on China's massive economic stimulus proposals.

The index clocked its third straight weekly advance, jumping 31% during the period. China's equity market has been shut for most of the week for public holidays.

Although on track for its fourth weekly advance, the MSCI EM stocks index .MSCIEF eyed modest gains for the current week and the currencies index .MIEM00000CUS was set for its first weekly decline in 10 as sentiment soured in the wake of escalating Middle East conflict.

The Israel shekel ILS= fell for the fourth day, touching a near two-month low.

The International Monetary Fund said an escalation of the conflict could have significant economic ramifications for the region and the global economy.

The erosion of investors' risk-on sentiment comes at a time when China's stimulus measures and the Federal Reserve's 50-basis-point rate cut have boosted the EM asset classes.

A rush to safe-haven assets have seen the dollar =USD hover at six-week highs, also boosted by uncertainties around upcoming U.S. rate cuts following an improving economic picture and a relatively hawkish tone from Federal Reserve Chair Jerome Powell.

"Many EM nations are continuing to hold as long as they can before issuing Eurobonds and other USD-denominated paper to foreign investors, clearly looking to get the biggest bang for their buck on yields," said Verto's FX Trader, Charlie Bird.

All eyes are now on the U.S. non-farm payrolls report, a day after data showed the labour market gliding at the end of the third quarter.

Meanwhile, Sri Lanka plans to move ahead with the third review of its nearly $3 billion programme of support from the IMF.

The rupee LKR= was trading at a 15-month high against the dollar, while the main stock index .CSE gained nearly 1% to its July highs.

Hungary's main stock index .BUX outperformed its Central and Eastern European peers, rising over 1%. Romania's monetary policy decision is due during the day, with interest rates expected to be kept unchanged.

Meanwhile, Reuters reported Kenya's government has asked the IMF to conduct an official assessment of corruption and governance issues, after a push by Western nations.

HIGHLIGHTS:

** China stimulus draws investors back to offshore bonds of troubled property sector

** Slower Philippine inflation in September gives room for rate cuts

** Czech central bank will be cautious with further rate cuts, governor says

Reporting by Ankika Biswas in Bengaluru; Editing by Alison Williams

For TOP NEWS across emerging markets nTOPEMRG
For CENTRAL EUROPE market report, see CEE/
For TURKISH market report, see .IS
For RUSSIAN market report, see RU/RUB