Changes dateline, updates to Asia open

By Lawrence Delevingne and Ankur Banerjee

SINGAPORE/BOSTON, Jan 31 (Reuters) - Asian shares wavered on Friday, weighed down by the return of tech-heavy South Korean stocks from holidays, but relatively strong earnings from U.S. tech giants kept risk sentiment intact while tariff threats pushed the dollar and gold prices higher.

Investors were also weighing central bank actions this week in which the Federal Reserve held rates steady on Wednesday, in line with expectations, with Fed Chair Jerome Powell saying there would be no rush to cut them again. The European Central Bank on the other hand cut interest rates on Thursday.

With markets in mainland China, Hong Kong and Taiwan still closed for the Lunar New Year, the return of South Korea grabbed the spotlight in Asia. The benchmark KOSPI .KS11 slid 1%, after China's DeepSeek unveiled earlier this week a breakthrough in cheap AI models that triggered a global market rout.

Shares of Samsung Electronics 005930.KS, which projected limited first quarter earnings growth on Friday, fell 3%, while SK Hynix 000660.KS, a key supplier to Nvidia, slipped 8%.

That left the MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS down 0.3% but still on course for a 1% gain this month, snapping its three month losing streak.

Nasdaq futures NQc1 rose 0.6% in Asian hours after Apple AAPL.O executives forecast relatively strong sales growth, a sign the company will recover from a dip in iPhone sales as it rolls out artificial intelligence features.

Technology stocks stumbled badly on Monday as investors factored in implications from the low-cost Chinese AI model, with shares of high-profile tech names such as Nvidia , Broadcom and Oracle getting pummelled.

But tech stocks have recouped some of those losses, with CEOs of Microsoft and Meta defending massive spending, saying it was crucial to staying competitive in the new field.

Vasu Menon, managing director of investment strategy at OCBC, said the DeepSeek development may create some uncertainty and put some pressure on valuations of AI players in the short term, but it does not alter the medium to long term outlook.

"The need for increased AI infrastructure will continue and any new computing capacity should get absorbed by increased AI demand which could grow significantly in the coming years."

TARIFF THREAT

Data on Thursday showed U.S. economic growth slowed in the fourth quarter, but remained robust enough for investors to expect the Fed to lower rates only gradually this year.

Markets are pricing in 45 basis points of easing this year, with traders getting comfortable with the idea of two rate cuts this year, LSEG data showed.

Investor focus will now switch to the December U.S. personal consumption expenditures (PCE) price index report, Fed's favoured gauge of inflation, due later in the day.

President Donald Trump's policies remain a risk for the Fed's policy outlook, and Saturday is likely to see new tariffs slapped on Canada, Mexico and possibly China.

The Mexican peso MXN= and Canadian dollar CAD= remained on guard ahead of the Saturday deadline set by Trump to impose 25% tariffs on imports from Mexico and Canada.

In Japan, the yen JPY=EBS was last a touch stronger at 154.19 per dollar, having already climbed more than 1% for the week thus far. It was set to gain 1.9% for the month, which would mark its best January performance in seven years.

Expectations of further rate increases from the BOJ this year has boosted the yen, with Deputy Governor Ryozo Himino saying on Thursday that the central bank will continue to raise rates if the economy and prices move in line with the bank's forecasts.

In commodities, gold XAU= rose to $2,799.71 an ounce to hit record levels, and was on course for a 6.5% rise in January, its strongest monthly performance since March. GOL/

Oil prices rose in early Asian trading on Friday as investors weighed the prospect of U.S. tariffs on Canadian and Mexican crude imports that could take effect this weekend.

Brent crude futures LCOc1 was 0.4% higher at $77.21 a barrel. U.S. crude futures CLc1 rose 0.5% to $73.13 a barrel. O/R

(Reporting by Ankur Banerjee in Singapore, Lawrence Delevingne in Boston and Amanda Cooper in London. Additional reporting by Anjana Anil in Bengaluru. Editing by Emelia Sithole-Matarise, Jane Merriman,Lisa Shumaker, Diane Craft and Gerry Doyle)

((ankur.banerjee@thomsonreuters.com;; Mobile - +65 8121 3925;))