GLOBAL MARKETS-Asian stocks off 4-month lows, but Huawei row weighs

* Asian shares hobbled by U.S.-China technology battle
* Spreadbetters expect firmer open for European stocks
* Fed's Powell dismisses concerns about rising debt levels
* Chip-related shares under pressure
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Hideyuki Sano and Tomo Uetake
TOKYO, May 21 (Reuters) - Asian shares won some respite on
Tuesday after Washington temporarily eased trade restrictions
imposed last week on China's Huawei, although fears of a further
escalation in tensions kept investors on edge.
Financial spread-betters expect London's FTSE .FTSE
Frankfurt's DAX .DAX and Paris's CAC .FCHI to gain between
0.3% and 0.5% when they open.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was up by a marginal 0.1% but stayed not far
from a four-month low touched on Friday.
It has fallen almost 8% from a nine-month peak hit just over
a month ago. Japan's Nikkei average .N225 retreated 0.3%.
China's blue-chip CSI300 index .CSI300 jumped 1.4%, a day
after it fell to a three-month intraday low as Washington
allowed Huawei Technologies Co Ltd HWT.UL to purchase
American-made goods in order to maintain existing networks and
provide software updates to existing Huawei handsets until Aug.
19. The benchmark Shanghai Composite .SSEC
climbed 1.2%.
Still, an increasingly acrimonious atmosphere between the
world's two biggest economies has led investors to abandon any
hopes of an early resolution, a sea change from just a few weeks
ago when a deal was considered to be within reach.
"With the news around the U.S. and Huawei taking a turn for
the worse, it seems that the trade war is increasingly showing
signs of becoming a tech war," said Seema Shah, senior global
investment Strategist at Principal Global Investors in London.
"The further this trend develops, the bigger the collateral
damage will be – particularly in Asia and the U.S., but the
ripple effect will be significant across the globe."
In New York, the S&P 500 .SPX lost 0.7% while the Nasdaq
Composite .IXIC dropped 1.5%. The Philadelphia Semiconductor
Index .SOX fell 4.0% to two-month lows. .N
Huawei suppliers took a hit, with Qualcomm QCOM.O falling
6.0% and Micron Technology MU.O 4.0%.
"The determination of the U.S. administration to paralyse
China's aspirations to become a technology super power is clear
when you consider that its actions against Huawei are not only
damaging to China's technology sector, but also the U.S. tech
sector," Shah said.
Some U.S. companies, such as Alphabet's GOOGL.O Google and
Apple Face ID parts supplier Lumentum Holdings Inc LITE.O ,
have already started to limit services to Huawei. Following Washington's Huawei ban, analysts suspect Beijing
could take retaliatory measures against U.S. companies, further
escalating tensions.
In addition to short-term economic disruptions, it could
have huge repercussions for the global economy, said Cliff Tan,
Head of East Asian research at MUFG Bank in Hong Kong.
"At a theoretical level, the Trump Doctrine means that in
the context of national security, the U.S. government can
seemingly go after anybody. That's why in my gut I wondered, has
Trump signalled the end of the global supply chain, for at least
a few years?," Tan said.
"I think trade diversion creates short-term winners and
losers, but the overall impact on innovation may be negative for
everyone," he added.
Markets showed scant reaction to a speech by Federal Reserve
Chairman Jerome Powell, who dismissed comparisons between the
rise of business debt to record levels in recent years and the
conditions in U.S. mortgage markets that preceded the
2007-to-2009 economic crisis. In the foreign exchange market, major currencies were on the
sidelines for now.
The euro was under pressure ahead of the European election
this weekend but was little moved at $1.1158 EUR= , off
Monday's low of $1.1150, its lowest since May 3.
The dollar was little changed at 110.18 yen JPY= , near
Monday's two-week high of 110.32 yen.
The British pound was listless near four-month lows, trading
at $1.2723 GBP=D4 , just a stone's throw from Friday's low of
$1.2714, as embattled UK Prime Minister Theresa May struggled to
pull together a Brexit deal.
The yuan firmed slightly to 6.9030 to the dollar CNY=CFXS
in onshore trade, still not far from a 5-1/2-month low of
6.9188.
The Australian dollar AUD=D4 dipped 0.5% to $0.6877 after
Australia's central bank governor said he would consider the
case for lower interest rates at its June policy meeting.
Oil prices held near multi-week highs as OPEC indicated it
was likely to maintain production cuts while escalating Middle
East tensions provided further support. O/R
Brent crude futures LCOc1 traded up 0.3% at $72.20 per
barrel while U.S. crude futures CLc1 fetched $63.31 per
barrel, up 0.3%.