SYDNEY, June 6 (Reuters) - Asian shares were subdued on

Friday as investors hunkered down for the all-important payrolls

report, while Tesla suffered huge losses on the very public feud

between President Donald Trump and billionaire Elon Musk.

A run of soft economic data this week has markets wary of a

downside surprise in the monthly payrolls print due later in the

day, which would add to fears of stagflation while piling

pressure on the Federal Reserve to ease policy in a hurry.

Tesla shares bounced 0.8% in after-hours trading

after tumbling a whopping 14% overnight to wipe off $150 billion

in market value. That came after Trump threatened to cut off

government contracts to Elon Musk's companies as the once close

relationship turned into a bitter public feud.

Nasdaq futures were flat and S&P 500 futures

inched up 0.1%.

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

slipped 0.1% on Friday but it is still set for a

weekly rise of 2.2% to hover just below an eight-month peak.

Japan's Nikkei rose 0.3% but is set for a weekly

drop of 0.7%.

South Korea's KOSPI is closed for a holiday but

was up 4.2% this week to nearly 11-month tops as the newly

elected President Lee Jae-myung planned an emergency package to

boost the flagging economy. The won has also gained 2%

this week to an eight-month peak.

Chinese blue chips were flat and Hong Kong's Hang

Seng dropped 0.3% as a call between Trump and Chinese

President Xi Jinping offered little clarity to ease ongoing

trade tensions.

"The U.S.-China agreement to de-escalate tensions, and the

recent phone call between Trump and Xi, shows both countries

have an economic 'pain threshold'," said Luke Yeaman, chief

economist at the Commonwealth Bank of Australia.

"This takes some severe downside scenarios off the

table, but tensions will remain high and further bouts of

escalation are likely...we see little prospect that a

comprehensive US-China trade agreement will be settled by 14

August."

WAIT FOR PAYROLLS

Weaker-than-expected labour market data, including a 47%

year-on-year jump in Challenger layoffs and a significant

downside surprise in ADP's private payrolls, have dampened

expectations for the payrolls report.

Forecasts are centred on a rise of 130,000 jobs in May, with

the unemployment rate holding steady at 4.2%.

Any unexpected weakness could bring the next U.S. rate cut

forward and trigger a huge rally in Treasuries. Futures imply

scant chances of a rate cut until September, which is about 93%

priced in, with another move likely to come in December.

Yields on the benchmark ten-year Treasuries were

flat at 4.3925%, having risen 3 basis points overnight to bounce

away from a one-month low.

"We expect payrolls to lose additional momentum in May,

printing a below-consensus 110,000," said analysts at TD

Securities in a note to clients.

"Markets have recently been singularly focused on tariffs

and deficits, with macro taking a back seat in recent weeks. Our

forecast may not be sufficient to catalyze this revamped focus

on macro, but we expect downside surprises to generate a larger

market reaction."

The dollar was flat against its major peers on

Friday but was set for a weekly drop of 0.7% on soft economic

data.

The euro got some support and hit a six-week top

of $1.1495 overnight after the European Central Bank cut rates

but signaled that it was nearing the end of its year-long policy

easing cycle. Investors have given up on a move in July, with

the final move mostly to come in December.

In commodities markets, oil prices were slightly lower

but were headed for weekly gains on supply concerns. U.S. crude

futures slipped 0.1% to $65.29 a barrel but was up 2.1%

for the week.

In precious metals, gold prices climbed 0.3% to

$3,362 an ounce. For the week, they are up 2.2%.

(Editing by Sam Holmes)