* US tech firms' spending plans lift Asian chipmakers

* Worries over valuations and returns from capital spending

persist

* Oil surges on widening Middle East tensions

* Yen languishing near 40-year lows

(Updates to Asia afternoon)

By Ankur Banerjee

SINGAPORE, July 23 (Reuters) - Asian stocks rose on Thursday

after U.S. technology firms outlined significant capital

spending plans that are likely to benefit chipmakers in the

region, while the escalating war in the Middle East pushed oil

prices to six-week highs.

Earnings from Alphabet and Tesla showed

no slowdown in the vast spending on AI infrastructure, with the

search giant raising its capital expenditure plans for the year.

A lot of the spending is expected to boost Asian chipmakers.

South Korea's KOSPI surged more than 3%, led by SK Hynix ( SKHY )

and Samsung Electronics ( SSNLF ). Japan's Nikkei

was up 0.7%.

Much of the focus this earnings season will be on whether

the huge amount of spending on AI is resulting in significant

returns, the pace of profit growth and whether the sky-high

valuations of some of the firms are warranted.

"For markets, this is not an AI-demand problem; it is an

AI-return problem," said Charu Chanana, chief investment

strategist at Saxo in Singapore.

"U.S. megacaps may face more scrutiny because they are

writing the cheques, while chipmakers, memory suppliers and

infrastructure companies get paid earlier in the investment

cycle."

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

gained about 1%, set for a 3% rise for the week,

snapping a two-week losing streak.

Gary Tan, portfolio manager at Allspring Global Investments,

said the key positive for Asia's chipmakers was that stronger

cloud growth was validating higher AI capex, reinforcing that

the hyperscaler spending cycle still has legs.

European futures, though, pointed to a muted open

ahead of a policy decision from the European Central Bank, where

the central bank is expected to stand pat but keep its options

open for a hike in September in the wake of the Iran crisis.

Nasdaq futures dipped 0.1% as investors' attention

remains on capital spending plans ahead of earnings from

Microsoft, Meta and Amazon next week.

OIL WORRIES ARE BACK

Rising oil prices have also revived inflationary worries,

pushing short-term U.S. Treasury yields to the highest in 17

months as traders wager the Federal Reserve may need to raise

interest rates sooner rather than later.

Brent crude futures rose 2% to $96 per barrel after

the U.S. launched a new round of strikes on Iran and Yemen's

Houthis targeted oil tankers in the Red Sea, widening the scope

of a conflict that has upended the global rates outlook.

Thierry Wizman, global FX & rates strategist at Macquarie

Group, said the rise in oil prices had renewed concern about the

impact on global growth.

Nearly five months of war have depleted global stockpiles

and stoked inflation worldwide, with analysts warning that the

closure of both the Strait of Hormuz and Bab el-Mandeb in the

Red Sea would disrupt shipping routes for more than a quarter of

the world's oil and gas.

"The worries about global growth are well-placed, we think,"

said Wizman.

YEN SHACKLED NEAR 40-YEAR LOWS

In currency markets, the Japanese yen was at 163.07

per dollar, giving up its gains from the previous session after

Bloomberg News reported that Bank of Japan officials were open

to raising rates at a faster pace.

On Tuesday, the currency weakened to its lowest level since

December 1986 at 163.24, with traders on alert for signs of

intervention from Tokyo. Japan's finance minister has repeatedly

issued verbal warnings but that has barely helped the yen.

"While the risk of FX intervention or stronger GPIF demand

for domestic assets could help curb JPY weakness, neither is

likely to fundamentally alter the JPY's role as a funding

currency," said OCBC strategists.

"A more durable shift towards the JPY becoming an investment

currency would likely require the BOJ to accelerate the pace of

rate hikes," they said.

The U.S. dollar stood tall amid safe-haven flows as well as

on the back of rising wagers that the Fed will increase rates

soon. Traders are pricing in 42 basis points of hikes this year

with a hike fully priced in for September.