GLOBAL MARKETS-Asia stocks drift up though economy fears remain

                                
 * Yen, U.S. Treasuries rise as safety still sought
                                
 * China economic growth in 2008 slowest in 7 years
                                
 * Oil steadies after jumping above $44 overnight
 (Updates prices, adds quote, comments)
                                
 By Kevin Plumberg
                                
 HONG KONG, Jan 22 (Reuters) - Asia stocks rose slightly on
Thursday, with investors snapping up beaten down bank shares,
but with global economic gloom still pervasive, safety trades
such as the yen and U.S. Treasuries also climbed.
                                
 A slew of reports in the region showed a rapid drop in
growth and collapse in export markets in Asia, suggesting it
may be a while before a recovery takes hold and provides
support for investor willingness to take risks. Chinese
economic growth slowed to a seven-year low in 2008 and Japanese
exports had a record decline in December.
                                
 "Across the region, a collapse in export growth has had
direct flow-on effects to industrial production, and we are now
seeing this start to impact employment, with household spending
the next in line," emerging market strategists at Royal Bank of
Canada said in a note.
                                
 Sterling fell after rising overnight on speculation UK
policy makers may take more aggressive actions to support their
economy and perhaps the British currency, which hit a 23-year
low on Wednesday, as well. [ID:nLL334786]
                                
 The MSCI index of Asia-Pacific stocks outside Japan
<.MIAPJ0000PUS> rose 1.1 percent though remained within
spitting distance of a one-month low touched earlier in the
session.
                                
 Japan's Nikkei average <.N225> was largely unchanged on the
day. Shares of large exporters such as Honda Motor Co <7267.T>
and Toyota Motor Corp <7203.T> weighed on the index as the yen
rose, but brokerages jumped after Credit Suisse upgraded the
sector to overweight from market weight.
                                
 Hong Kong's Hang Seng index climbed 1.3 percent, powered by
a 4.3 percent rise in HSBC stock <0005.HK>. Shares of the
largest European bank had plunged for eight consecutive days to
the lowest in a decade on concern whether the firm has access
to adequate capital.
                                
 Although risk taking among investors returned suddenly
overnight, knocking down a closely followed market volatility
index <.VIX> 18 percent, uncertainty about medium-term
corporate earnings, global consumer demand and the banking
industry kept the element of fear high.
                                
 At the same time, analysts and fund managers also believe
though that massive government spending and tax cuts around the
world will eventually trickle down to real economies, maybe
even as soon as late 2009.
                                
 For that reason, and given how badly corporate credit was
sold off last year, some large asset managers have begun to
sift through corporate bonds and equities in search of
bargains. For FACTBOX, click on [ID:nHKG338110]
                                
 POUNDED
                                
 The British pound resumed a decline against the dollar back
toward 23-year lows, cutting gains made after a source told
Reuters that its slide will be discussed at the next meeting of
the Group of Seven nations. Sterling was down 0.4 percent to
$1.3826 <GBP=> after dropping to near $1.36 on Wednesday.
                                
 "Sterling still looks far from hitting a bottom with
mounting expectations for further and bigger interest rate cuts
from the Bank of England to combat the quickly deteriorating
economy," said a senior trader at a Japanese trust bank.
                                
 The U.S. dollar fell 0.5 percent to 88.96 yen <JPY=>, after
rebounding from Wednesday's low of 87.10 yen, the lowest since
July 1995. The euro dropped 0.8 percent to 115.84 yen
<EURJPY=R>, though remained well above a 7-year low of 112.08
yen hit on Wednesday.
                                
 U.S. Treasuries, which have been in hot demand as the
credit crisis has kept investors in need of liquidity and
safety, rebounded after dropping overnight on worries about
upcoming debt supply to finance various U.S. rescue packages.
                                
 The yield on the benchmark 10-year note <US10YT=RR>, which
moves in the opposite direction of the price, slipped to 2.52
percent from 2.54 percent late in New York.
                                
 U.S. crude futures steadied on Thursday, after rallying
more than 6 percent the previous day, as traders weighed the
impact of recent OPEC supply cuts and a weaker dollar.
                                
 Crude futures for March deliver <CLc1> -- which took over
as the main front month contract -- rose 32 cents to $43.87 a
barrel.
 (Additional reporting by Satomi Noguchi in TOKYO)
 (Editing by Kazunori Takada)