(Updates to Asia mid afternoon, adds European futures)

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U.S. futures rise after Apple's ( AAPL ) positive sales forecast

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Dollar edges higher, gold hits record on tariff worries

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Yen set for best January since 2018 on BOJ rate hike bets

By Ankur Banerjee

SINGAPORE, Jan 31 (Reuters) - Global shares drifted on

Friday as investors reflected on relatively strong earnings from

tech bellwethers in a week that started with a market rout

sparked by the emergence of a low-cost Chinese artificial

intelligence model.

Fresh threats from U.S. President Donald Trump of tariffs on

Mexico and Canada lifted the dollar and pushed gold prices to

record high as traders brace for the Saturday deadline set by

Trump to impose 25% tariffs.

Nasdaq futures rose 0.58% after Apple ( AAPL )

executives forecast relatively strong sales growth. European

futures pointed to a muted open after Europe's

benchmark index closed at a record high the previous day.

The pan-European STOXX 600 is on course for an over

6% gain in January, its strongest monthly performance since

November 2023.

Technology stocks across the globe stumbled badly on

Monday as investors factored in implications from the low-cost

Chinese AI model, with shares of high-profile tech names such as

Nvidia ( NVDA ), and Oracle getting pummelled.

But tech stocks have since recouped some of those losses,

CEOs of Microsoft ( MSFT ) and Meta defended their massive spending,

saying it was crucial to staying competitive in the new field.

Vasu Menon, managing director of investment strategy at

OCBC, said the DeepSeek development may create some uncertainty

and put some pressure on valuations of AI players in the short

term, but it does not alter the medium to long term outlook.

"The need for increased AI infrastructure will continue and

any new computing capacity should get absorbed by increased AI

demand which could grow significantly in the coming years.

With markets in mainland China, Hong Kong and Taiwan still

closed for the Lunar New Year, the return of South Korea grabbed

the spotlight in Asia.

The benchmark KOSPI slid over 1%, with shares of

Samsung Electronics ( SSNLF ), which projected limited first

quarter earnings growth on Friday, down 3%, and SK Hynix ( HXSCF )

, a key supplier to Nvidia ( NVDA ), 9.5% lower.

That left the MSCI's broadest index of Asia-Pacific shares

outside Japan down 0.2% but still on course for

a 1% gain this month, snapping its three month losing streak.

TARIFF THREAT

Investors were also weighing central bank actions this

week in which the Federal Reserve held rates steady on

Wednesday, in line with expectations, while the European Central

Bank cut interest rates on Thursday as expected.

"The (Fed) meeting reinforced our belief the Fed is content

to sit on the sidelines, in no hurry to move until the future is

clearer," said Susan Hill, head of government liquidity at

Federated Hermes ( FHI ).

"We still think the Fed will cut rates this year and have

pencilled in a 25 basis-point cut by mid-2025 and another coming

around autumn."

Data on Thursday showed U.S. economic growth slowed in the

fourth quarter, but remained robust enough for investors to

expect the Fed to lower rates only gradually this year.

Investor focus will now switch to the December U.S. personal

consumption expenditures (PCE) price index report, Fed's

favoured gauge of inflation, due later in the day.

Trump's policies remain a risk for the Fed's policy outlook,

and Saturday is likely to see new tariffs slapped on Canada,

Mexico and possibly China. The Mexican peso and Canadian

dollar remained on guard ahead of the deadline.

In Japan, the yen was last at 154.58 per dollar,

having already climbed more than 1% for the week thus far. It

was set to gain 1.9% for the month, which would mark its best

January performance in seven years.

Expectations of further rate increases from the BOJ this

year has boosted the yen. Deputy Governor Ryozo Himino said on

Thursday that the central bank will continue to raise rates if

the economy and prices move in line with the bank's forecasts.

In commodities, gold rose to $2,799.71 an ounce to

hit record levels, and was on course for a 6.5% rise in January,

its strongest monthly performance since March.

Brent crude futures was 0.4% higher at $77.21 a

barrel. U.S. crude futures rose 0.8% to $73.31 a barrel.