By Stella Qiu

SYDNEY, Feb 25 (Reuters) - Asian shares slid on Tuesday amid worries about U.S. investment curbs on China, while a run-up in the euro faded as investors wait for Germany to sort out the formation of its new government with no major surprises.

Gold hit a record high on tariff concerns. Investors are also cautious ahead of results from AI darling Nvidia NVDA.O, where options point to a share price move of about 8% in either direction should they surprise.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dropped 1.3%. Japan's Nikkei .N225 returned from a public holiday with a drop of 0.9%, but shares of its five major trading houses surged thanks to interest from billionaire investor Warren Buffett.

Bank of Korea on Tuesday cut its interest rates by a quarter-point as expected, helping South Korean shares .KS11 trimming some losses.

Hong Kong's Hang Seng index .HSI tumbled 2.3%, extending the fall from Monday after U.S. President Donald Trump signed an order to restrict Chinese investments in strategic areas such as chips, AI and aerospace. Chinese blue chips .CSI300 dropped 0.9%.

Tech giant Alibaba 9988.HK, which had propelled the Hong Kong index to three-year highs, plunged 7.8% after its U.S.-listed shares tumbled 10% overnight in the biggest daily drop in more than two years.

"The key aspect will then be how China/Asia-based traders act after the initial weakness on the cash equity open, and whether further sellers kick in feeling the momentum move is firmly over," said Chris Weston, head of research at Pepperstone. "By way of event risk, there is little in the way of data to trouble those trading intraday through Asia, and cross-asset moves will be driven by portfolio flows in reaction to Trump's directive and how China AI plays fare."

Also weighing on sentiment is Trump's indicating that proposed levies on Mexico and Canada were still set to start next week, although investors had hoped negotiations would forestall the threat.

Overnight on Wall Street, technology shares tumbled. Apple AAPL.O countered the trend by announcing it would spend $500 billion in U.S. investments in the next four years and add about 20,000 research and development jobs across the country.

The broad pullback in stocks has raised the stakes for Nvidia's results on Wednesday, when investors will be looking for further rapid growth in revenue and questioning whether the hefty spending on the technology is justified after China's low-cost DeepSeek rattled the industry.

Nasdaq futures NQc1 and S&P 500 futures ESc1 were flat in Asia.

A slew of weak U.S. data over recent days - including retail sales, consumer confidence and surveys on the manufacturing and services sectors - have eroded market confidence about the exceptionalism of the U.S. economy, taking some shine out of the U.S. dollar.

Combined with Trump's incoming tariffs and the uncertainty over a barrage of federal government layoffs, investors see the Federal Reserve on track to cut rates by a total of 50 basis points this year, up from 40 bps just last week.

Bonds have rallied, with the benchmark Treasury yields US10YT=RR hitting a new two-month low of 4.377% in Asia. Two-year yields US2YT=RR also touched 4.156%, the lowest since early December, helped by robust demand from an overnight auction. US/

In the currency markets, the run-up in the euro faded out with the currency back to where it started the week. It EUR=EBS was last at $1.0461, having hit a one-month top of $1.0528 after Germany's election produced no nasty surprises.

The U.S. dollar bounced from its 2-1/2-month low against its major peers and was last at 106.75 =USD.

Friedrich Merz was set to become Germany's next chancellor after his opposition conservatives won the national election. Merz should be able to form a coalition to govern with the ruling centre-left Social Democrats, even though the party finished third behind the far-right Alternative for Germany.

Oil prices were slightly higher on Tuesday. Brent crude LCOc1 rose 0.2% at $74.93 a barrel, while U.S. crude CLc1 was up 0.3% at $70.92 a barrel. O/R

Gold XAU= was off 0.2% at $2,945 per ounce, having hit a record high of $2,956.15 on Monday, with the $3,000 level tantalisingly close.

(Reporting by Stella Qiu. Editing by Gerry Doyle)

((yifan.qiu@thomsonreuters.com))

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