* MSCI Asia ex-Japan drops 0.2 pct
* European markets seen opening higher
* Pound retains gains after draft deal on future EU-UK relations
* Crude prices continue plunge on oversupply concerns
* Japan markets closed for a holiday
By Andrew Galbraith
SHANGHAI, Nov 23 (Reuters) - Steep losses in Chinese share markets dented Asian equities on Friday as lingering trade war tensions and weak corporate earnings in Europe added to worries about global growth.
With U.S. markets closed overnight for Thanksgiving and Japan on holiday on Friday, early trading lacked direction until the sell-off in China brought on more pain for stock investors in the region.
Shares in Europe, in contrast, are expected to rise Friday. Financial spreadbetters expect London's FTSE, Frankfurt's DAX and Paris' CAC to advance 0.3 percent each.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.23 percent as Chinese blue-chips tumbled 2 percent and the Shanghai Composite index lost 2.2 percent.
China's markets have been mired in a slump as the country's trade war with the United States has exacerbated worries about slowing growth. Few analysts expect sustained improvement for Chinese shares even if U.S. and Chinese leaders make progress in mending ties at a G20 meeting in Argentina at the end of the month.
At this stage, some economists doubt the G20 talks will bring progress.
Prakash Sakpal of ING in Singapore said there "haven't been any promising developments" since the trade war started.
"There is a lot of rhetoric driving things farther from any sort of solid consensus that both countries could come around."
Seoul's Kospi ended 0.6 percent lower and Taiwan shares lost 0.5 percent. Hong Kong's Hang Seng was down 0.6 percent in afternoon trade.
Australian shares held on to gains, rising 0.4 percent, but posted their second straight weekly loss.
U.S. equity futures were pointing to weakness on Wall Street when trading resumes Friday. S&P E-mini futures were down 0.5 percent at 2,636.
On Thursday, stock markets in Europe were hit by disappointing earnings on further signs that corporate profit growth is peaking globally.
Those earnings underscored the lingering anxiety among equity investors as trade tensions, slowing global investment and growth kept stock markets on the back foot after a torrid October. A draft deal between Britain and the European Union on future relations reached late Thursday did little to lighten the mood.
In the currency market, the pound was flat, buying $1.2875 after rising more than 1 percent on Thursday on news of the draft agreement between Britain and the EU, which describes a close post-Brexit relationship. The agreement follows a draft treaty last week that set the terms for Britain's departure from the EU in March.
But the deal faces a rocky ride once it reaches a deeply divided British parliament containing hardline eurosceptic and staunch pro-EU factions, and various shades of grey in-between.
Indeed, analysts at National Australia Bank cautioned against early celebrations.
"After EU leaders are expected to rubber stamp this political declaration alongside the withdrawal agreement at a summit on Sunday, the 'meaningful vote' in the UK Parliament is likely in the second week in December. It would be far too optimistic to declare victory on a deal yet," they said in a note to clients.
The euro edged up to $1.1413, despite statements by Italy's leaders that they would press ahead with expanding the country's deficit next year and resist pressure from EU authorities to trim its budget, as investors focus on conciliatory rather than confrontational comments.
The dollar weakened 0.08 percent against the yen to 112.84 .
China's yuan fell to 6.9386 per dollar, with trade concerns weighing. The currency has also come under pressure in recent weeks in sympathy with falling Chinese rates, with yields on shorter-term Chinese government bonds below their U.S. counterparts.
In commodities markets, oil prices hit 2018 lows as U.S. inventories rose to their highest level since December, adding to concerns about a global crude glut.
U.S. crude was trading down 2.5 percent at $53.24 after coming within 5 cents of an October 2017 low reached earlier in the week. Brent crude futures hit their lowest since December 2017 at $61.52 per barrel, and were last down 1.2 percent at $61.85 a barrel.
Spot gold was flat at $1,227.17 per ounce.
Reporting by Andrew Galbraith; Editing by Shri Navaratnam and Richard Borsuk