*

Asian stock markets : https://tmsnrt.rs/2zpUAr4

*

Nikkei weathers rising yen, HK tech shares in limelight

*

Japan GDP beats forecasts, dollar hit by poor retail data

*

Investors wary of Russia-Ukraine talks, tariff news

(Updates prices to Asia afternoon)

By Wayne Cole

SYDNEY, Feb 17 (Reuters) - Asia share markets crept

higher on Monday as Hong Kong's tech sector stole the limelight,

while upbeat Japanese economic growth contrasted with a weak

U.S. retail sales report to lift the yen on the dollar.

Geopolitics remained in focus with reports that talks on the

Russian-Ukraine conflict will begin in Saudi Arabia this week,

though the participants are not entirely clear.

The imminent threat of reciprocal U.S. tariffs has receded

until April, but the risk that they might include levies based

on value added taxes in other countries was a major worry.

"The prospect, however misguided, of the U.S. levying an

additional 20% tariff on all EU imports, on top of whatever else

it deems appropriate, and to varying degrees on all other

countries who have VAT regimes is a truly terrifying prospect in

terms of the implications for global growth," said Ray Attrill,

head of FX research at National Australia Bank.

The Financial Times reported on Sunday that the European

Commission would explore tough import limits on certain foods

made to different standards in an effort to protect its farmers,

echoing President Donald Trump's reciprocal trade policy.

For now, investors were just relieved that major tariffs had

not already been introduced and MSCI's broadest index of

Asia-Pacific shares outside Japan firmed 0.3%.

Tokyo's Nikkei edged up 0.2% after Japan reported

surprisingly strong economic growth of an annualised 2.8% for

the fourth quarter. The gains were limited by a further rise in

the yen to 151.65 per dollar.

South Korean shares added 0.6% and Taiwan's

rallied 1.3%.

Chinese blue chips were flat, with recent moves

led by the Hong Kong market which jumped 7% last week on

optimism the Chinese firms could deliver low cost versions of AI

to compete with the West.

The rush was underpinned by a 24% surge in Alibaba ( BABA )

on news it would partner with Apple ( AAPL ) to support iPhones'

artificial intelligence services offering in China.

Alibaba ( BABA ) reports earnings on Thursday and options imply the

share could move 7.5% in either direction on the results.

Goldman Sachs has raised its outlook for Chinese growth and

stocks, arguing that widespread adoption of AI could raise

earnings per share by 2.5% a year over the next decade. It would

also lift the fair value of Chinese equity by 15% to 20% and

attract $200 billion of fund inflows.

The pan-European STOXX 600 index has also been

attracting global funds having climbed for eight straight weeks

to be up 8% since the turn of the year.

EUROSTOXX 50 futures held steady on Monday, while

DAX futures rose 0.2% and FTSE futures eased

0.1%.

DOLLAR NOT SO EXCEPTIONAL

A holiday in U.S. markets made for thin trading, though the

S&P 500 futures still rose 0.2% and Nasdaq futures

0.3%. Wall Street was briefly fazed by the retail sales report

on Friday but the S&P 500 ended the week up 1.5%, while the

Nasdaq gained 2.6%.

Treasuries rallied on the soft sales numbers as markets

swung back toward pricing in two Federal Reserve rate cuts this

year rather than just one.

Minutes of the Fed's last meeting are due on Wednesday and

should offer some detail about the outlook for further easing,

while there are at least six Fed officials due to speak.

Yields on 10-year Treasuries were holding at

4.478%, well off a top of 4.660% hit in the middle of last week.

The drop in yields undermined the dollar and left the index

at 106.84 after a loss of 1.2% last week. The euro was

firm at $1.0498, having rallied 1.6% last week, and

aiming to test resistance at $1.0533.

The pound held at $1.2592 ahead of a raft of UK

data including employment, wages and consumer prices, which will

impact market wagers on the timing of the next rate cut.

Bank of England Governor Andrew Bailey is due to speak this

week and will no doubt be questioned on the outlook.

Central banks in Australia and New Zealand hold policy

meetings this week and are both expected to cut interest rates,

the former by 25 basis points and the latter by twice that.

In commodity markets, gold was not far from record highs at

$2,899 an ounce having rallied for seven weeks straight.

Oil has had a tougher time as the prospect of peace talks on

Ukraine could lead to greater supply should sanctions on Russian

output be relaxed.

Brent slipped another 12 cents to $74.62 a barrel,

while U.S. crude fell 19 cents to $70.55 per barrel.

(Editing by Shri Navaratnam)