*

Asian stocks drop, European futures point to subdued open

*

Gold huddled near record high on safe haven flows

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Fed's cautious tone provides dollar support

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Investor focus turns to details of Trump's reciprocal

tariffs

(Updates to Asia afternoon)

By Ankur Banerjee

SINGAPORE, March 21 (Reuters) - Asian stocks fell on

Friday in a downbeat end to the week as deepening geopolitical

worries and fears over U.S. tariffs and their impact on the

global economy curbed investors appetite for risk, keeping

safe-haven gold near record highs.

Futures for the S&P 500 and Nasdaq were

steady in Asian hours, while European futures pointed to a weak

open.

Policymakers across the globe struck a cautious note in a

week filled with central bank meetings as uncertainty in global

economics and politics grew. The U.S. Federal Reserve, the Bank

Of Japan and the Bank of England all held rates steady.

Central bankers highlighted the unsettled outlook due

largely to rising trade tensions triggered by the U.S under

President Donald Trump. Trump intends to impose new reciprocal

tariff rates on April 2, ushering in fresh wave of uncertainty.

Reports of Israeli airstrikes on Gaza and a huge blast from

a Ukrainian drone attack on a Russian military airfield were a

reminder of rising geopolitical tensions pushing investors

towards safe haven assets.

"With the bar for near-term rate cuts still high, markets

have shifted focus back to growth concerns and tariff risks

which will continue to fuel volatility," said Charu Chanana,

Saxo's chief investment strategist.

MSCI's broadest index of Asia-Pacific shares outside Japan

fell 0.85%, with stocks in China, Hong Kong,

Taiwan and Indonesia dropping sharply.

Hong Kong's Hang Seng index slid over 2%, poised for

its second straight week in the red as investors turned cautious

following a surge in tech stocks and the index hitting a

three-year high on Tuesday. The Hang Seng is still up 18% for

the year, the best performing major stock market in the world.

Japan's Nikkei, however, was up 0.3% and the broader

Topix index touched an eight-month high led by banking

stocks as stronger-than-expected inflation data fuelled

expectations for further interest rate hikes by the Bank of

Japan.

Investors will now focus on the details of the Trump

administration's April 2 tariffs as markets become increasingly

nervous about the impact of tit-for-tat tariffs on inflation and

economic growth.

Ray Sharma-Ong, head of multi-asset investment solutions for

Southeast Asia at Aberdeen Investments, said the main

uncertainty revolves around the size of reciprocal tariffs,

which may lead to markets repricing further downside risks to

growth.

The growing uncertainty and the Fed reiterating that it was

in no rush to cut rates lent support to the dollar. The dollar

index measure against a basket of six counterparts was

steady at 103.84, after climbing 0.36% on Thursday.

The index fell to a five-month low this week as earlier

hopes for growth-friendly policies under Trump have given way to

anxiety that the global trade war he started could trigger a

U.S. recession.

The yen was slightly weaker on the day at 149.20

per dollar but stayed close to the near five-month high of

146.545 touched last week. The yen is up 5% this year on

expectations that the BOJ will hike rates again in 2025.

Data showed Japan's core inflation hit 3.0% in February and

an index stripping away the effect of fuel rose at the fastest

pace in nearly a year, a sign of broadening price pressure that

reinforces market expectations of further hikes.

"Although Governor Ueda made much of the risks surrounding

U.S. trade policy on Wednesday, we think he's just hedging his

bets - considering it a risk factor," said Min Joo Kang, senior

economist at ING.

"Therefore, if trade tensions don't escalate more than the

market currently expects, they won't affect the BOJ's rate hike

plans."

In commodities, oil prices rose on Friday, poised for their

strongest weekly performance since January.

Brent crude futures climbed 0.5%, while U.S. West

Texas Intermediate crude futures were up 0.6%. Both were

set for 2% gains for the week.

Gold eased 0.4% to $3,031.5 in Asian hours, just

below the record high of the previous session but on course for

the third straight week of gains, supported by safe-haven

demand.

(Editing by Kate Mayberry and Kim Coghill)