* Egypt raises interest rates by 600 bps

* Fed chair Powell's testimony awaited

* Poland rate decision on tap

* Stocks up 0.6%, currencies flat

March 6 (Reuters) - A gauge of emerging market stocks inched higher on Wednesday as heavyweight Hong Kong recouped some losses, while the Egyptian pound sank after its central bank said it would let the currency trade freely.

Egypt's international bonds jumped by more than 2 cents after its central bank said it had hiked interest rates by 600 basis points at an unscheduled meeting and would let the pound trade freely in an apparent move to restore economic stability with the help of Gulf investment inflows.

The Egyptian pound tumbled more than 53.7%, last at 47.4 per dollar.

"The central bank's decision to allow the market to determine the exchange rate is a pivotal move towards unifying the nation's exchange rates ... it also aligns with the IMF's recommendations, a prerequisite for financial assistance," Shaun Murison, senior market analyst at IG said.

Last month, International Monetary Fund (IMF) Managing Director Kristalina Georgieva had told Reuters that it has resolved key issues with Egyptian authorities in a review of its $3 billion loan programme and should finalise an augmented financing package within weeks.

Hong Kong shares closed 1.7% higher after falling more than 2% in the previous session, while India's Nifty 50 advanced 0.5%.

A gauge of EM currencies was flat as caution prevailed ahead of Federal Reserve Chair Jerome Powell's congressional testimony later in the day.

The Czech crown weakened 0.2% against the euro, while the Hungarian forint held steady at 393.27.

Hungary's economy is projected to grow by 2.4% this year, weaker than the government forecast, and the outlook is subject to significant risks, the Organisation for Economic Co-operation and Development (OECD) stated.

Poland's zloty depreciated 0.1% against the euro ahead of its central bank's decision on interest rates later in the day, which is widely expected to hold rates at 5.75%.

Stocks in emerging Europe were mixed, with Poland's WIG 20 up 0.2%, while Turkish shares dipped 0.2%.

South Africa's rand appreciated 0.5% against the dollar, its fifth straight day of gains as gold prices, the country's top export, hovered close to record high levels breached on Tuesday.

HIGHLIGHTS

** China to step up economic policy adjustments in 2024, state planner says

** Turkey central bank moves to curb lending, FX demand to bolster tight stance

** Hungarian retail sales struggle in January as recovery falters

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(Reporting by Shashwat Chauhan in Bengaluru; Editing by Alex Richardson)