* MSCI Asia-Pacific index down 0.03 pct, Nikkei up 0.25 pct
* Lingering trade woes continue to curb risk appetite
* Dollar index reaches 2-week peak amid trade tensions
* Crude oil prices dip slightly after previous day’s rally
By Shinichi Saoshiro
TOKYO, Aug 3 (Reuters) - Asian stocks were steady on Friday, with gains from the tech-led rise on Wall Street capped by the latest exchange of trade threats between Beijing and Washington, while safehaven flows lifted the dollar to a two-week high.
Investors also remain cautious ahead of the July U.S. jobs report due later on Friday, which will give a reading on the health of the world’s largest economy and possible clues about the pace of Federal Reserve interest rate rises.
MSCI’s broadest index of Asia-Pacific shares outside Japan inched down 0.03 percent. The index was down about 0.6 percent for the week, during which it slumped to a two-week high on Thursday on U.S.-China trade tensions.
The trade war between the world’s top two economies intensified midweek after U.S. President Donald Trump raised pressure on China by proposing a higher 25 percent tariff on $200 billion worth of Chinese imports.
“The equity markets now have time to regroup and settle down after yesterday’s slide. But the U.S.-China trade conflict involves the epicentre of the region and this will continue to weigh psychologically on Asian equities,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.
Japan’s Nikkei added 0.25 percent and South Korea’s KOSPI edged up 0.32 percent, drawing some support from overnight gains by U.S. stocks.
Technology stocks pushed the S&P 500 and Nasdaq higher on Thursday, driven by Apple shares as the iPhone maker became the first publicly traded U.S. company worth a trillion dollars.
In foreign exchange, the dollar index against a basket of six major currencies extended its overnight gains and rose to a two-week high of 95.209.
Trade tensions were seen driving demand for the U.S. currency, with a slide by the pound providing an extra lift.
Sterling dropped more than 0.8 percent on Thursday despite the Bank of England lifting interest rates, after Governor Mark Carney said monetary policy needed to “walk not run” and expressed concern about the risks of a cliff-edge Brexit.
The euro was flat at $1.1586 following a loss of 0.6 percent the previous day.
Bubbling concerns over Italy weighed on the euro, with the country’s bond yields rising to two-month highs following media reports of a government meeting on the budget revived market concerns about tensions within the ruling coalition.
The dollar added 0.1 percent to 111.75 yen, having gained about 0.6 percent this week. The dollar received a big boost against the yen earlier this week after the Bank of Japan tweaked its monetary policy but retained its commitment to keeping interest rates low.
Financial markets are now looking to the July jobs U.S. report due later in the session for immediate cues.
According to a Reuters survey of economists, nonfarm payrolls likely rose by 190,000 jobs in July after increasing by 213,000 in June.
“A decent jobs report should prompt a straight-forward reaction by the markets, with U.S. yields rising and the dollar gaining,” said Ichikawa at Sumitomo Mitsui Asset Management.
With trade tensions generating investor demand for safehaven assets, the 10-year U.S. Treasury note yield pulled back slightly to 2.985 percent overnight from a 10-week high above 3 percent brushed midweek.
The 10-year Treasury yield was pushed to the 10-week peak partly due to a surge in Japanese government bond yields, which rose to 1-1/2-year highs this week as the market tested the BOJ’s rejigged policy framework under which it now allows yields to fluctuate in a wider band.
Crude oil prices eased back slightly after the previous day’s rally, which was driven by an industry report suggesting U.S. crude stockpiles would soon decline again after a surprise rise in the latest week.
Brent crude futures were down 0.25 percent at $73.26 a barrel after surging 1.5 percent on Thursday.
Reporting by Shinichi Saoshiro; Editing by Sam Holmes