* Hanyu leads field going into free skate
* Hanyu's score only 1.04 points off personal best, world record
* Fernandez second, Uno third
* America's Chen has disastrous programme, finishes 17th (Adds quotes, details)
By Gabrielle Tetrault-Farber and Elaine Lies
GANGNEUNG, South Korea, Feb 16 (Reuters) - Defending Olympic champion Yuzuru Hanyu hypnotised a delirious crowd with a stellar short programme at the Pyeongchang Olympics on Friday, reasserting his dominance of men's figure skating after a lengthy absence from competition.
Hanyu executed all his jumps and spins with exceptional technique and grace, earning him first place and 111.68 points -- just 1.04 away from his personal best score and world record and a key step towards becoming the first man in 66 years to win back-to-back Olympic figure skating golds.
One of his strongest challengers going into Pyeongchang, American jumping ace Nathan Chen, had a disastrous programme and finished in 17th place with 82.27 points.
Hanyu, who had not competed since October last year because of an ankle injury, took to the ice as a horde of Japanese fans shouted "Fight!" and was showered with Winnie the Pooh stuffed animals at the end of his performance.
"I just felt happy to skate and be on the ice again," Hanyu told reporters. "I'm satisfied with every element and I'm really happy because I was really the feeling the music.
"I just thought to do my best. I wanted to say to everyone 'I'm back'."
Injured last year while practising a quad Lutz, Hanyu drew a roar from the crowd when he landed his first jump, a quad loop, and when he hit his triple Axel and quad toeloop and triple toeloop combination.
"It was pretty much as I'd been practising, my body moved as I wanted it to," he said. "Jumps like the Axel, the Salchow and the toeloop are all jumps that have been with me for years, and so I felt grateful to them as I did them."
Asked if he felt pressure to be back on the world stage after being months away, which included a long time off the ice and re-introducing quad jumps only a bit over two weeks ago, Hanyu, who'd said he felt frustrated not to compete, said no.
"When I arrived here and was able to skate without injury, I just simply felt happy. It was fun to skate."
Six-time European champion Javier Fernandez expertly executed his crowd-pleasing programme to earn 107.58 points, finishing in second place.
"I'm feeling good, I had a great day," he told reporters. "This season I've had a lot of ups and downs and I'm happy that today I just started the short programme really well."
Japan's Shoma Uno hung on to land his triple Axel, earning 104.17 points and third place, while China's Jin Boyang finished fourth with 103.32 points.
Dmitri Aliev, an Olympic Athlete from Russia, finished fifth after skating a strong programme that earned him 98.98 points, nearly eight points over his personal best.
"Honestly I wasn't really worrying," Aliev told reporters, adding that his Olympic performance at the Gangneung Ice Arena was only the second time he had skated at the facility.
"I persistently worked toward this competition. I understand that if I do my job, I can get a good result."
Canada's Patrick Chan, who struggled with his jumps in the team event's short programme, fell on his triple Axel, a jump that has haunted him throughout his career.
"I've been dealt a bad card," Chan, who finished sixth with 90.01 points, told reporters.
"I think growing up I just never had great technique on the Axel. I'm just trying to redeem myself now."
Quadruple-jump specialist Chen fell on his first jump - a quad flip - before stepping out of his quad toeloop and putting his hand down on his triple Axel.
"I'm upset, obviously," Chen told reporters. "There's nothing to do but move on from here."
The skaters will compete in the long programme on Saturday, after which medals will be awarded. (Reporting by Gabrielle Tétrault-Farber and Elaine Lies; editing by Sudipto Ganguly)