GLOBAL MARKETS-Asia markets waver, Nvidia drops after earnings beat

By Gregor Stuart Hunter

SINGAPORE, Aug 28 (Reuters) - Asian stocks wobbled on Thursday as blowout earnings from artificial intelligence bellwether Nvidia NVDA.O were offset by worries over the outlook for its China business, while the dollar remained shaky as investors bet on a near-term rate cut.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS swung between gains and losses, and was last down 0.2%, as U.S. equity futures were dragged lower by after-hours decline in shares of the chip designer, which has become the world's most valuable company.

"After such a strong run, investor exposure was stretched, leaving little margin for disappointment," said Charu Chanana, chief investment strategist at Saxo in Singapore.

"We should expect some spillover," she added, even though it is unlikely to hurt wider investor confidence.

"Asian chipmakers — especially in Korea and Taiwan — are the cleanest beta to Nvidia and will likely feel the drag."

Following a two-day string of gains that has pushed U.S. markets to a fresh record, S&P 500 e-mini futures ESc1 fell 0.2% and Nasdaq futures NQcv1 tumbled 0.4% after Nvidia's results.

Investor concerns about Nvidia centred on its China business, which hung in the balance, caught up in the trade war between Washington and Beijing.

"We expect the stock to trade down modestly following an in-line quarter and guidance against a backdrop of elevated expectations heading into the call," analysts from Goldman Sachs wrote in a research report. "Management noted that it did not ship any H20 products to China in the quarter."

Japanese stocks fluctuated between gains and losses after Kyodo news agency reported on Thursday that Japan's top trade negotiator Ryosei Akazawa cancelled a planned visit to the United States, where he was expected to iron out details of the trade deal agreed last month. The Nikkei 225 .N225 was last up 0.4%.

Korean stocks advanced 0.3% after the Bank of Korea kept rates on hold at 2.5%, as widely expected by economists.

Hong Kong stocks slumped, with the Hang Seng Index .HSI falling 1%, led by a 9.7% decline in Meituan 3690.HK shares, after the Chinese food delivery giant reported a drop in second-quarter profit on Wednesday.

In the currency markets, the dollar was on the defensive as traders ramp up bets of an interest rate cut next month, following Federal Reserve Chair Jerome Powell's recent dovish pivot and as President Donald Trump moves to assert control of the world's biggest central bank.

Earlier this week, Trump said he is firing Federal Reserve Governor Lisa Cook, leaving some investors worried about the Fed's independence. Cook's lawyer said she will file a lawsuit against the White House.

Trump pressured the Fed to lower interest rates during his first term in the White House and he has escalated that campaign in recent months while seeking to make appointments to key positions on the U.S. central bank. The president has demanded that rates be cut by several percentage points and threatened to fire Powell, although he recently backed down from that.

The yield on benchmark 10-year Treasury notes US10YT=RR fell to 4.2362% compared with its U.S. close of 4.238% on Wednesday.

The market is currently pricing a 88.7% probability of a 25-basis point rate cut at Fed's policy meeting on 17 September, up from 61.9% a month ago, according to the CME Group's FedWatch tool.

The dollar dropped 0.1% against the yen to 147.275 JPY=EBS, while the European single currency EUR=EBS was up 0.1% on the day at $1.16475, seeking to extend a three-week winning streak that bumped up its gains this month to 2.02%.

In commodities markets, Brent crude LCOc1 fell 0.5% to $67.74 per barrel.

Gold was slightly lower. Spot gold XAU= was traded down 0.2% at $3391.60 per troy ounce. GOL/