(Reuters) - A look at the day ahead in Asian markets. 

The People's Bank of China's interest rate decision tops a busy Asia-Pacific economic event calendar on Thursday, with many stock markets around the world at new peaks or hugging recent highs as investors try to make sense of the blitz of headlines surrounding global trade tensions.

A trade war between the U.S. and its major trading partners would be damaging for growth and markets, so you would think investors are pricing that risk into their portfolios.

Minutes of the Federal Reserve's Jan. 28-29 policy meeting on Wednesday showed that officials were concerned about the inflationary impact of Trump's agenda, with firms saying they expect to raise prices to pass through the cost of import tariffs.

The World Trade Organization, meanwhile, said that discussions were "constructive," after China condemned tariffs launched or threatened by U.S. President Donald Trump that could upend the global trading system.

But these risks may be losing their grip on markets. That's not to suggest complacency is taking over - there have been a few wobbles recently - but the S&P 500, MSCI World, and benchmark European and UK equity indices are forging new highs.

Perhaps investors are becoming inured to it all, or they believe Trump's stance is posturing to secure concessions and the outcome will be less severe than feared.

Either way, Asian markets are struggling more, with China's travails, the strong dollar and high U.S. bond yields cooling local optimism. But there are pockets of strength, like Hong Kong-listed Chinese tech shares, and sentiment and capital flows toward China are improving.

Investors cheered the optics of President Xi Jinping's meeting this week with the country's private sector leaders, the result of which could be a more substantial recovery in China's growth, especially the tech sector.

Indeed, Bank of America's latest fund manager survey showed that China macro sentiment improved in February for the first time in four months. This was the first uptick in China's prospects outside of any policy stimulus announcement in the past three years, suggesting a 'DeepSeek effect' may be at play.

The most bullish development for risk assets this year would be a pick-up in Chinese growth, the survey showed, far outweighing other potential scenarios like AI productivity gains, Fed rate cuts or a Russia-Ukraine peace deal.

The PBOC on Thursday is expected to leave its benchmark one- and five-year lending rates unchanged at 3.1% and 3.6%, respectively, as authorities walk the fine line between prioritizing financial stability and providing more stimulus at a time when Beijing is facing fresh trade tensions.

The PBOC has shifted towards implementing an "appropriately loose" monetary policy stance this year, but the weak exchange rate and banks' evaporating profits are limiting its easing efforts.

Here are key developments that could provide more direction to Asian markets on Thursday:

- China interest rate decision

- Australia unemployment (January)

- South Korea producer price inflation (January)