Updates after market open in Tokyo and Seoul

SINGAPORE, June 8 (Reuters) - Asian markets plunged on Monday as investors slammed the brakes on the red-hot AI rally, while Israeli strikes on Beirut sent oil prices and the dollar higher.

An 8% drop for South Korea's chip-heavy KOSPI .KS11 benchmark triggered a 20-minute trading halt and has it down almost 17% from last week's record high.

Japan's Nikkei .N225 fell 3.5% in early trade, though U.S. S&P 500 ESc1 and Nasdaq 100 NQc1 futures made small gains.

The Nasdaq .IXIC had dropped 4.2% on Friday, with selling concentrated in semiconductor stocks after a hot jobs report ramped up expectations for Federal Reserve interest rate hikes, putting the brakes on what has been a sparkling AI-led rally.

Two-year Treasury yields US2YT=RR rose more than 11 basis points on Friday and benchmark 10-year Treasury futures TYc1 were about five ticks lower early on Monday morning in Asia.

"The AI-drives-everything narrative frayed last week," said Bob Savage, head of markets macro strategy at BNY.

"Whether this is a healthy pause in the nine-week equity rally or a top remains the key question. The IPO focus on SpaceX and Anthropic is part of the pause – whether to make room for the new market cap or to rethink value."

INFLATION AND ECB AHEAD

The week ahead is headlined by the giant SpaceX listing, expected to price on Thursday and trade on Friday, but will also have inflation in focus with U.S. consumer price data due on Wednesday and central bank meetings in Canada and Europe.

Last week, bitcoin BTC= notched its heaviest weekly drop since the collapse of crypto exchange FTX in late 2022, falling about 16%. It was hovering just shy of $63,000 on Monday.

SpaceX's debut is expected to be followed by other mega IPOs in the coming months from Anthropic and OpenAI, raising so much money that brokers are nervous it could draw down other assets.

The Middle East situation also remains delicate, and Brent crude futures LCOc1 were up about 2.6% to $95.45 a barrel on Monday morning after an Israeli attack on Beirut prompted Iran to direct a salvo of missiles at Israeli targets.

OPEC+ agreed on Sunday to the fourth increase in its oil output targets in as many months.

In currency trade the dollar was firm and holding above 160 yen JPY= and pushed the Australian dollar AUD= to $0.7038. The euro EUR= hovered at $1.1518.