Offshore Chinese stocks, yuan pare US tariff losses on AI, stimulus bets

Updates prices, adds more details

HONG KONG, Feb 3 (Reuters) - Chinese stocks in Hong Kong and the offshore yuan pared losses as markets reopened after the Lunar New Year holidays, with shock at U.S. President Donald Trump's tariffs outweighed by optimism over domestic AI firms and possible stimulus measures.

The Hang Seng China Enterprises Index .HSCE was up by less than 0.1% at its Monday close, and the Hang Seng Tech Index .HSTECH rose 0.3%, both recovering from steep morning losses.

Hong Kong's benchmark index .HSI was flat, after dropping as much as 1.7% to a one-week low during the morning session.

Trump slapped China with a 10% levy over the weekend as threatened last month, and called the measures necessary to combat illegal immigration and the drug trade. Beijing said it would challenge the move at the World Trade Organization and take other countermeasures.

"Sentiment was pressured, but there's relief that the uncertainty over whether there would be tariffs or not has been resolved," said Kenny Ng, market strategist at Everbright Securities International in Hong Kong.

"The market could now shift its focus to China's stimulus and look for more supportive measures from the legislative meeting in March," he added.

A rally in AI-related stocks following DeepSeek's disruptive release of a model also helped shore up the market.

Chip maker SMIC 0981.HK surged 10.3%, its biggest single-day gain since October, while Alibaba 9988.HK rallied 6.5% to a three-month high.

The offshore yuan CNH=D3 trimmed losses to trade at 7.3477 against the dollar, having earlier hit a record low of 7.3765.

STIMULUS EYED

China's benchmark blue chip index .CSI300 fell 3% in January, surrendering nearly half of September's 40% rally, as investors fretted over the increasingly volatile macro outlook and Beijing's tepid policy response.

Weakening economic growth in the world's second-largest economy could put pressure on policymakers to roll out more forceful support measures.

China's factory activity grew at a slower pace in January, while staffing levels fell at the quickest pace in nearly five years as trade uncertainties increased, a private-sector business survey showed on Monday.

"China's stimulus measures have remained rather measured in the last few months as they awaited tariff news to be able to respond better, and there could be an expectation that authorities could come out with stronger stimulus measures now," said Charu Chanana, chief investment strategist at Saxo.

(Reporting by Jiaxing Li in Hong Kong, Ankur Banerjee in Singapore; Editing by Jacqueline Wong and Alexander Smith)

((jiaxing.li@thomsonreuters.com))