* China's yuan lead EM currencies higher
* Malaysian ringgit gains as c.bank keeps rate steady
* Russian stock markets at record high
By Sruthi Shankar
Nov 5 (Reuters) - Emerging market stocks hit a six-month high on Tuesday on hopes the United States and China could hammer out a partial trade deal, while the yuan broke past the key 7-per-dollar mark for the first time since early August.
The yuan strengthened by 0.6% to 6.9931 per dollar in offshore trading, leading a swathe of developing world currencies higher. The MSCI EM currencies index rose 0.2%.
Reports that China is pushing U.S. President Donald Trump to remove more tariffs imposed in September as part of a "phase one" U.S.-China trade deal boosted risk appetite among investors.
"Although the market may have mostly priced in a scenario in which the U.S. delays or cancels the December 15th tariffs, expectation of a tariff rollback seems still limited," Citi's Lu Sun wrote in a client note. "We thus expect USDCNH to trade towards ~6.90 area if the September tariff rollback is realized."
A source briefed on the talks said Chinese negotiators want Washington to drop 15% tariffs on about $125 billion worth of Chinese goods that went into effect on Sept. 1. They are also seeking relief from earlier 25% tariffs on about $250 billion of imports.
The yuan's gains came even as China's central bank cut the interest rate on its one-year medium-term lending facility (MLF) loans for the first time since early 2016 as policymakers work to prop up a slowing economy.
Trade optimism and easing measures helped stocks in China and Hong Kong gain about 0.5% even as data showed services sector activity expanded at its slowest pace in eight months in China .SS
The EM stocks index jumped half a percent to hit its highest level since May 6, with Russia's stock market touching a record high as oil prices remained steady.
The trade-sensitive Korean won, up 0.6%, gained for the seventh session in eight, while Philippine peso rose 0.3% after data showed the annual rate of inflation eased for a fifth straight month in October, but matched analysts' expectations.
The Malaysian ringgit, up 0.4%, hit a fresh three-month high after its central bank kept interest rates steady as anticipated, saying it expects private sector spending to remain resilient, offsetting pressure from weaker exports.
The South African rand, meanwhile, extended gains for a third session as the country escaped a "junk" rating on its sovereign debt from credit ratings agency Moody's on Friday.
However, a survey showed private sector activity shrank for the sixth consecutive month in October as output and new orders continued to slide amid poor operating conditions, partly linked to recent nationwide power cuts.
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For RUSSIAN market report, see (Reporting by Sruthi Shankar in Bengaluru; editing by Philippa Fletcher)