(Updates prices)

* MSCI's Asia-Pacific index outside Japan falls 1.39%, led

by South Korea's 4.16% slide

* Brent slips 0.55% to $79.01 a barrel as Iran deal

developments stay in focus

* CME FedWatch tool prices 54% chance of September Fed rate

hike

By Satoshi Sugiyama

TOKYO, Aug 6 (Reuters) - Asian shares reversed course on

Thursday after the previous day's AI-fuelled rally, as fickle

enthusiasm over AI spending turned cautious, while oil prices

held in a tight range as markets assessed prospects for an Iran

peace deal.

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

fell 1.39%, led by declines in tech firms. South

Korean shares extended losses to 4.16%, while Japan's

Nikkei was down 0.94%, paring an earlier drop of as much

as 2.05%.

In Seoul, Samsung Electronics ( SSNLF ) fell 6% and peer

SK Hynix ( SKHY ) plunged nearly 10%. In Tokyo, Kioxia ( KXHCF )

lost 8.2%, while Tokyo Electron ( TOELF ) slumped 5.18%.

The pullback followed a weaker session on Wall Street overnight,

where the Nasdaq snapped a days-long winning streak as

shares of Elon Musk-led SpaceX and Advanced Micro

Devices ( AMD ) stumbled after their quarterly earnings.

Although the AI and satellite company highlighted

faster-than-expected returns from its AI spending, investors

remained concerned about how long its profitable Starlink

business could continue to bankroll costly investments in data

centres.

And while AMD's results beat analysts' estimates, they fell

short of investors' lofty expectations.

A senior Iranian source and two regional officials told Reuters

that a proposed deal between Iran and Oman to help end five

months of war between Iran and the United States would give

Tehran control over ships entering the Gulf through the Strait

of Hormuz, one of the biggest concessions yet to Iran.

Brent crude futures fell to $79.01 per barrel, down

0.55%. U.S. West Texas Intermediate futures edged 0.65%

down to $74.73 a barrel.

Madison Cartwright, senior geo-economics analyst at

Commonwealth Bank of Australia, said a deal to reopen the Strait

of Hormuz could be reached by early September, though he

remained sceptical that a deal was imminent.

"Iran still has more leverage and will extract additional

concessions from the U.S. under any new deal," Cartwright said

in a note.

In early European trades, pan-region Euro Stoxx 50 futures

were up 0.18%, German DAX futures gained 0.26%

and FTSE futures nudged 0.06% higher.

Investors are now turning their attention to U.S. labour

market data ahead of Friday's closely watched nonfarm payrolls

report. ADP figures on Wednesday showed private employers added

44,000 workers last month, slowing from 95,000 in June and

coming in about 25,000 below expectations.

Economists polled by Reuters expect the government's report

to show the U.S. economy added 80,000 jobs in July, after a

57,000 gain in June, with the unemployment rate forecast to hold

steady at 4.2%.

Futures markets are pricing in about a 54% chance of a rate

hike at the Federal Reserve's September meeting, down from 58% a

day ago, according to the CME's ​FedWatch tool.

Federal Reserve Bank of San Francisco President Mary Daly, who

is not currently a voting member of the Federal Open Market

Committee, said on Wednesday she was "completely supportive" of

the decision last week to hold interest rates steady.

The yield on benchmark U.S. 10-year notes fell

0.83 basis points to 4.609%. In U.S. stock futures, Nasdaq 100

E-minis were down 0.14%, whereas U.S. S&P 500 E-minis

were 0.17% higher and Dow E-minis were up 0.21%.

Against the yen, the dollar was steady at 157.75

following last week's historic currency market interventionwhen

Japan and the U.S. bought yen and pledged further action if

necessary to support the currency.

The dollar/yen pair is likely to struggle to find a clear

direction, with investors expected to stay largely on the

sidelines ahead of Friday's U.S. job report, said Sony Financial

Group senior analyst Juntaro Morimoto.

Spot gold rose 0.2% to $4,254.10 an ounce, advancing

for a fourth session, while spot silver fell 0.38% to

$61.84 an ounce.

(Reporting by Satoshi Sugiyama

Editing by Shri Navaratnam and Lincoln Feast.)