(Reuters) -China's Alibaba Group Holding said on Thursday it will scrap the spin off of its cloud unit in response to export curbs by the United States on chips used in artificial intelligence applications.

Its U.S.-listed shares fell about 5% in premarket trading after it also reported second-quarter revenue in line with market expectations.

"The recent expansion of U.S. restrictions on export of advanced computing chips has created uncertainties for the prospects of Cloud Intelligence Group," Alibaba said.

The e-commerce giant posted revenue of 224.79 billion yuan ($31.01 billion) in the quarter, compared with analysts' average estimate of 224.32 billion yuan, according to LSEG data.

China's economic recovery has been uneven. While the industrial and the retail sectors performed better than expected, the crisis-hit property sector still weighed on consumer confidence.Alibaba resorted to pressuring merchants to price aggressively during its Singles Day festival as it looks to take on competitors such as Douyin and PDD Holdings' Pinduoduo who have been selling lower-cost products year-round.

This is the first quarterly results for CEO Eddie Wu, one of Alibaba Group's co-founders and long-time lieutenant of former chief Jack Ma, who took over from former group chief executive Daniel Zhang in September.

($1 = 7.2481 Chinese yuan renminbi)

(Reporting by Akash Sriram in Bengaluru. Editing by Sam Holmes and Arun Koyyur)