GLOBAL MARKETS-Asian shares reverse early gains, euro falls to one-week lows

* MSCI ex-Japan drift away recent 2-1/2-year peak
* U.S.-China trade tensions in focus
* China's Caixin shows sustained services sector recovery
* Wall Street climbs on defensive share gains
* Dollar gives back gains

By Swati Pandey
SYDNEY, Sept 3 (Reuters) - Asian equities pared early gains
on Thursday amid growing worries about Sino-U.S. relations while
the euro hit a one-week low as traders wagered on central bank
action to tame the single currency.
In early European trade, the pan-region Euro Stoxx 50
futures STXEc1 and German DAX futures FDXc1 added 0.6% each,
FTSE futures FFIc1 climbed 0.2% while France's CAC 40 futures
FCEc1 rose 0.4%.
U.S. stock futures, the S&P 500 e-minis ESc1 , faltered
0.3%.
MSCI's broadest index of Asia-Pacific shares outside of
Japan .MIAPJ0000PUS , which was up more than 0.5% earlier in
the session, slipped 0.1% with Chinese and Hong Kong shares
leading the losses.
The Hang Seng .HSI fell 0.7% while China's blue-chip index
.CSI300 was 0.5% lower.
A Bloomberg news report that China was planning sweeping
policy changes to its semiconductor industry to fight U.S.
restrictions added fuel to ongoing concerns about deteriorating
relations between the world's two biggest economies, analysts
said.
Bloomberg reported, citing sources, China was planning a
suite of measures to bolster research, education and financing
for the chip industry as part of its five-year plan next month.
The move comes after the United States said on Wednesday it
would now require senior Chinese diplomats to get State
Department approval before visiting U.S. university campuses or
holding cultural events with more than 50 people outside mission
grounds. Fears of a further escalation in tensions overshadowed
positive data showing China's service sector activity grew for a
fourth straight month in August to stay above the 50-mark.
Elsewhere, Australia's S&P/ASX 200 .AXJO rose 0.9% and
Japan's Nikkei .N225 added 0.9% while South Korea's KOSPI
index .KS11 added 1.2%.
While analysts generally expect the equity markets rally to
extend further led by massive central bank stimulus, they
cautioned against rising risks.
"I think we're now at a point where tactically it makes
sense to be more prudent than two or three months ago as there
are still a number of significant risks for investors to contend
with," said Scott Berg, portfolio manager of T. Rowe Price's
global growth equity strategy.
"The economic recovery remains fragile and there is still
considerable uncertainty over the growth trajectory beyond the
initial rebound phase," Berg said.
China-U.S. tensions and U.S. presidential elections were
other major risks, with a Democrat victory likely seeing a
"major switch in policy direction and a different regulatory and
tax regime," he added.
On Wall Street overnight, the three major equity indexes
moved higher with gains led by defensive sectors such as
utilities .SPLRCU as the high-flying tech sector .SPLRCT
paused.
Data on Wednesday showed U.S. private employers hired fewer
workers than expected for a second straight month in August,
suggesting that the labour market recovery was
slowing. A separate report showed factory orders rose more than
expected in July, pointing to continued improvement in the
manufacturing sector. In currencies, the euro EUR= slipped 0.4% to $1.1803 after
the Financial Times reported that several members of the
European Central Bank's (ECB) governing council were concerned
that the euro's rise could weigh on the region's growth. FRX/
That followed remarks on Tuesday from ECB's chief economist
Philip Lane, who said the exchange "does matter" for monetary
policy, which had begun the euro's descent from above $1.20.
Westpac currency strategist Sean Callow said the FT report
was "stoking some interest in next week's ECB meeting at the
very least."
The dollar rose against a basket of currencies to be up 0.3%
=USD . It was slightly higher on the safe haven Japanese yen
JPY= at 106.25.
In commodities, U.S. crude CLc1 dipped 0.2% to $41.42 a
barrel. Brent crude LCOc1 fell to $44.27 per barrel. Gold was
slightly lower, with spot prices XAU= at $1933.98 an ounce.
GOL/

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Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Rouble tumbles https://tmsnrt.rs/31Rndf5
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(Editing by Jacqueline Wong and Sam Holmes)