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

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Nikkei restrained by rising yen, U.S. market holiday

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Japan GDP beats forecasts, dollar hit by poor retail data

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Investors wary of Russia-Ukraine talks, tariff news

By Wayne Cole

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

becalmed by a Wall Street holiday on Monday while the dollar

nursed losses suffered after a weak U.S. retail sales report

rekindled wagers for two rate cuts this year.

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 edged 0.1%

higher.

Japan's Nikkei was little changed as investors eyed

a bounce in the yen, while South Korea added 0.2%.

The recent star in Asia has been Hong Kong's 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 led by a 24% jump 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.

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.

DOLLAR NOT SO EXCEPTIONAL

A holiday in U.S. markets made for a quiet start, leaving

S&P 500 futures and Nasdaq futures near flat.

Wall Street was briefly fazed by the retail sales report on

Friday but the S&P 500 still 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

steady at $1.0485, having rallied 1.6% last week, and

aiming to test resistance at $1.0533.

The dollar eased 0.2% to 152.02 yen after Japan

reported surprisingly strong economic growth of an annualised

2.8% for the fourth quarter.

The pound was firm at $1.2577 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

$2,879 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 36 cents to $74.38 a barrel,

while U.S. crude fell 42 cents to $70.32 per barrel.

(Editing by Shri Navaratnam)