Traders were rattled by news that the Chinese startup had created a programme that apparently matched the capacity of US artificial intelligence pacesetters for a fraction of the investments made by American companies.

The development raised questions about the vast sums of cash invested in the sector by the world's leading companies and has fuelled fears of a retreat from some of the world's leading firms -- Nvidia tanked almost 17 percent Monday and has struggled to fully recover since.

A mixed bag of results from tech giants including Microsoft and Meta in recent days have been unable to instill much excitement, though there was some cheer from Apple's announcement Thursday of a $124.3 billion fourth-quarter profit.

Several industry leaders have welcomed DeepSeek's arrival and the injection of competition, while analysts have flagged the benefits of the shake-up.

"This is the same path the PC revolution followed, with computing power becoming cheap enough that millions of individuals could use it at an affordable cost," said Morningstar's Eric Compton.

"We believe a future where AI was both prohibitively expensive and also 'taking over the world' was not likely. As such, we view the advancements made by DeepSeek as promising and healthy for the overall ecosystem."

- Gold record -

Still, after this week's sell-off in Japanese chipmakers that had benefitted from the AI-rally in recent years, South Korean firms took a hit as Seoul reopened after a holiday down more than one percent.

SK hynix tumbled nearly 12 percent at one point, while Samsung shed more than two percent -- with the latter also reporting a drop in operating profits in October-December as it struggled to meet demand for chips used in AI servers.

However, there were gains in Tokyo, Sydney, Singapore, Wellington, Manila, and Jakarta.

Shanghai, Hong Kong, and Taipei remained closed for the Lunar New Year break.

Spot gold held close to the record high of $2,799.65 touched Thursday owing to uncertainty about the economic outlook and Trump's trade policies.

The dollar rose, with the Mexican peso and Canadian dollar taking a lot of the heat after the president said he would go ahead with the threatened 25 percent tariffs on the countries pencilled in for Saturday.

He has accused the two key trading partners of failing to tackle illegal immigration and drug trafficking.

However, it was not clear whether oil would be included or not. The countries supplied more than 71 percent of US crude oil imports in 2023, according to a congressional report.

China is another possible target, though the president's tone on the economic powerhouse has been less forceful than during his election campaign, when he promised levies as high as 60 percent.

On taking office on January 20 he said he was considering a level of 10 percent.

The yen also held its own after Bank of Japan deputy governor Ryozo Himino indicated officials would continue to lift interest rates this year and as data Friday showed core consumer prices in Tokyo -- a barometer for the country -- climbed at their fastest pace since February.

- Key figures around 0300 GMT -

Tokyo - Nikkei 225: UP 0.1 percent at 39,540.37 (break)

Hong Kong - Hang Seng Index: Closed for a holiday

Shanghai - Composite: Closed for a holiday

Euro/dollar: UP at $1.0394 from $1.0392 on Thursday

Pound/dollar: UP at $1.2424 from $1.2420

Dollar/yen: DOWN at 154.00 yen from 154.38 yen

Euro/pound: DOWN at 83.65 pence from 83.67 pence

West Texas Intermediate: UP 0.4 percent at $73.01 per barrel

Brent North Sea Crude: UP 0.4 percent at $77.14 per barrel

New York - Dow: UP 0.4 percent at 44,882.13 (close)

London - FTSE 100: UP 1.0 percent at 8,646.88 (close)

dan/fox

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