March 8 (Reuters) - A look at the day ahead in Asian

markets.

Trading in Asia on Friday is shaping up to be a battle

between global market strength on one side, and local caution on

the other, particularly surrounding the two regional powerhouses

China and Japan.

U.S., European and world stocks as measured by the MSCI

All-Country index roared to record highs again on Thursday,

spurred by - what else? - another surge in chip stocks. Hopes

that the Fed and ECB could soon start cutting rates also boosted

sentiment.

New highs for the S&P 500 and Nasdaq, a weaker dollar and

lower U.S. Treasury yields should be a positive cocktail for

Asian stocks. The MSCI Asia ex-Japan index will have its seventh

weekly rise in eight if it avoids a 1% decline on Friday.

But concern over China's economy and deepening U.S.-Sino trade

tensions are never far from the surface, and they bubbled up

again on Thursday.

In Japan, meanwhile, the Nikkei slumped 1% after the yen clocked

its biggest rise of the year on mounting speculation that the

Bank of Japan could end negative interest rates as soon as this

month.

The Nikkei has touched record highs recently so some

profit-taking is to be expected. Similarly, U.S. futures market

data show speculative short positions in the yen are the largest

in six years, so a bout of short covering was always likely.

Japan dominates the Asian economic calendar on Friday, with

the latest household spending, bank lending, trade and current

account data all scheduled for release.

The news flow around China over the last 24 hours hasn't

been particularly bullish for asset prices.

S&P Global warned that China's credit rating could be cut if its

economic recovery remains weak or is driven largely by extensive

stimulus. S&P last downgraded China in 2017 but rival agency

Moody's put Beijing on a downgrade warning in December.

Beijing is fighting deflation, a property sector crash and

slowing growth. The sums needed to turn all that around, as well

as bail out indebted local governments, are extremely high.

On the trade front, three U.S. Senate Democrats from auto

manufacturing states on Thursday urged the Biden administration

to hike import tariffs on Chinese electric vehicles, the latest

push by lawmakers to protect the U.S. auto sector.

With pressure growing on the White House to take further steps

to prevent Chinese vehicle imports, the U.S. House Energy and

Commerce committee approved legislation to vote on legislation

giving China's ByteDance six months to divest from short video

app TikTok or face a U.S. ban.

This is the backdrop to IMF Managing Director Kristalina

Georgieva and First Deputy Managing Director Gita Gopinath's

planned visit to Beijing later this month to meet with Chinese

authorities and attend economic conferences.

Here are key developments that could provide more direction

to markets on Friday:

- Japan household spending (January)

- Japan trade and current account (January)

- Taiwan trade (February)