Updates at 0522 GMT

By Ankur Banerjee

SINGAPORE, July 18 (Reuters) -Asian equities slid on Thursday, led by chip stocks as investors fret over the prospect of escalating trade tensions between the U.S. and China, while the yen was firm after scaling a six-week high following suspected interventions by Tokyo.

The U.S. dollar =USD loitered closed to its weakest in four months against a basket of currencies as comments from Federal Reserve officials bolstered the case for a cut in September, keeping gold XAU= near record highs.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.63%, with a sub-index of IT stocks .MIAPJIT00NUS down 2.5%. Tech-heavy South Korean shares .KS11 fell 1.5%, while Taiwan stocks .TWII were down 2%.

The yen's strength and the sharp drop in chip stocks took Japan's Nikkei .N225 down more than 2%.

A report that the United States was considering tighter curbs on exports of advanced semiconductor technology to China triggered a sharp sell-off in chip stocks, with the Nasdaq .IXIC tumbling overnight. .N

"I think this volatility spike is now leading to some broader risk reduction as investors worry about stretched positioning," said Ben Bennett, Asia-Pacific investment strategist at Legal and General Investment Management.

The European bourses were due for a mixed open, with Eurostoxx 50 futures STXEc1 0.14% lower while German DAX futures FDXc1 were little changed and FTSE futures FFIc1 edged up 0.5%.

Investor attention will be on the policy decision from the European Central Bank later in the day, where the central bank is expected to stand pat, although comments from officials will be crucial in gauging when the next rate cut will come.

Broader risk sentiment also took a hit after Republican presidential candidate Donald Trump said on Wednesday Taiwan "did take about 100% of our chip business" and should pay the U.S. for its defence as it does not give the country anything.

China stocks wavered as investors awaited policy news from a key leadership gathering in Beijing. The Shanghai Composite index .SSEC was down 0.12% and the blue-chip CSI300 index .CSI300 up 0.12%.

RATE CUT BETS

Investors are fully pricing in a 25 basis point rate cut in September after Federal Reserve officials said on Wednesday the U.S. central bank was "closer" to cutting interest rates, citing the progress in inflation easing close to its 2% target.

That has left the dollar struggling, with the euro EUR=EBS steady at $1.093425, close to the four-month high it touched on Wednesday. Sterling GBP=D3 was last at $1.3001, just below the one-year peak breached in the previous session.

The dollar index =USD, which measures the U.S. currency versus six peers, was 0.1% higher at 103.78, not far from the four-month low of 103.64 it touched on Wednesday.

The yen JPY=EBS hit a six-week high against the dollar at 155.375 in early trading after a sharp rise on Wednesday that had traders suspecting Japanese authorities were once again in the market supporting the currency. It was last at 156.

Bank of Japan data suggested Tokyo may have bought nearly 6 trillion yen last week to lift the frail yen away from the 38-year lows it has been rooted to since the start of the month.

The yen has dropped 9.5% against the dollar this year as the wide interest rate difference between the U.S. and Japan weigh, creating a lucrative trading opportunity, in which traders borrow the yen at low rates to invest in dollar-priced assets for a higher return, known as carry trade.

Analysts though say that last week's suspected moves by Tokyo might lead to traders unwinding some of their positions.

"It feels like the tide is shifting a little here and it's generating some discomfort for yen funded carry traders," said James Athey fixed income portfolio manager at Marlborough Investment Management.

In commodities, gold XAU= was 0.34% higher at $2,466.62 per ounce just below the record high of $2,483.60 it touched on Wednesday. GOL/

Oil prices were on the rise, with Brent LCOc1 futures 0.4% higher at $85.45 a barrel, while U.S. West Texas Intermediate (WTI) crude CLc1 gained 0.7% to $83.43. O/R

Editing by Jacqueline Wong

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