SEOUL (Reuters) -South Korea's Hanwha Aerospace will cut the size of a planned fundraising by one-third to 2.3 trillion won ($1.6 billion) to ensure the success of the financing, and after investor and regulatory pushback, it said on Tuesday.

The country's largest defence firm had previously announced in March an equity capital increase worth 3.6 trillion won to build up overseas and domestic production to meet growing international demand.

However, the Financial Supervisory Service, South Korea's financial regulator, ordered Hanwha Aerospace to revise the plan, saying the company needed to better explain how the equity raising fit with a broader plan to restructure the company.

"This is considered to be a positive factor regarding minimizing shareholder dilution, and increases the possibility of success in financing," said the company in a regulatory filing.

Hanwha Aerospace also faced pushback from investors concerned the size of the deal would be dilutionary and unjustified, given the company was expected to be able to foot the bill for future investments from its earnings.

The offering is set to open for public subscription on June 10, after the final pricing is announced on June 2, according to its filing.

Analysts have forecast the company will have about 5 trillion won in earnings for the next two years.

The decision to downsize the deal is also occurring amid turmoil in the international financial markets from the prospects of a global trade war and a broader economic slowdown as the result of U.S. President Donald Trump's tariffs.

On Tuesday, Asian stocks bounced off 1-1/2-year lows and U.S. stock futures pointed higher as markets paused heavy selling after the tariffs were announced on hopes that Washington might be willing to negotiate over some of its aggressive levies.

The market volatility is expected to have an impact on capital raising deals across Asia as investors navigate the risk of tariffs increasing already high geopolitical tensions between the U.S. and China, according to bankers and lawyers that participate in the capital markets.

"The market is still reeling," said Jini Lee, a debt capital markets partner at law firm Ashurst in Hong Kong. "Until the dust settles, it would be difficult to price deals currently given the uncertainty in interest rate direction and any further retaliatory measures which may be announced."

In Hong Kong, two initial public offerings are in the middle of book-building with Duality Biotherapeutics aiming to raise up to $200 million and Jiangsu Zenergy Battery Technologies Group aiming for a $130 million deal.

The two transactions are expected to be a test of investors' appetite to buy China-related new share sales.

($1 = 1,469.9500 won)