GLOBAL MARKETS-Asian shares off 4-month lows, but Huawei row casts shadow

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

By Hideyuki Sano
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.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was up 0.35% 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 .N225 fell 0.4%.
The blue-chip CSI300 index .CSI300 rose 1.0%, 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.
Still, an increasingly acrimonious atmosphere between the
world's two biggest economies have 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 0.67% while the Nasdaq
Composite .IXIC dropped 1.46%. The Philadelphia Semiconductor
Index .SOX fell 4.02% to two-month lows.
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, Beijing could take
retaliatory measures against U.S. companies, further escalating
tensions, said Norihiro Fujito, chief investment analyst at
Mitsubishi UFJ Morgan Stanley Securities.
Corporate earnings guidance provided to investors so far
does not take into account the impact of the Huawei ban, said
Nobuhiko Kuramochi, chief strategist at Mizuho Securities.
"The sales of semi-conductors will be curtailed at least in
the short term and companies will likely need to revise down
their earnings," he said.
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 $1.1165 EUR= , off
Monday's low of $1.1150, its lowest level since May 3.
The dollar was little changed at 110.21 yen JPY= Monday's
near two-week high of 110.32 yen.
The British pound was listless near four-month lows, trading
at $1.2730 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 6.9040 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 0.2% to $0.6891 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.
Brent crude futures LCOc1 traded up 0.25% at $72.16 per
barrel while U.S. crude futures CLc1 fetched $63.30 per
barrel, up 0.3 percent.