GLOBAL MARKETS-Asia stocks struggle as China fears weigh

                                
 * Asian stocks choppy after multi-session slide
                                
 * Analysts believe fears of China tightening overdone
                                
 * But political, regulatory concerns continue to weigh
                                
 * Korea stocks, won dip briefly as North, South exchange
fire
                                
 * Yen extends gains as investors cut bets on high-risk
assets
                                
  By Kevin Yao
                                
 SINGAPORE, Jan 27 (Reuters) - Asian stocks hovered near
two-month lows on Wednesday after a seven-day slide sparked by
fears that China's heightened efforts to rein in soaring credit
growth could hamper the global economic recovery.
                                
 Investors were cautious ahead of the conclusion of a
two-day policy meeting by the U.S. Federal Reserve, which is
expected to yield little in terms of a near-term policy shift.
                                
 But markets will as usual carefully scrutinise a Fed
statement after the meeting for clues on how much longer it
will leave its ultra-low interest rates and easy money policy
in place, and for updates on the health of the U.S. economy.
                                
 The meeting is taking place amid a fierce Senate debate
over whether Chairman Ben Bernanke should be appointed for a
second termm, which has also weighed on investor confidence
this week.
                                
 The euro fell to a nine-month low of 125.48 yen <EURJPY=R>
as investors continued to cut risky trades amid the
uncertainty.
                                
 The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> shed nearly 0.6 percent. The index slid 2
percent on Tuesday to its lowest in two months after China
implemented a rise in bank reserve requirements to curb credit
growth.
                                
 Chinese regulators have ordered banks to call back some of
the loans they extended in January, ratcheting up the pressure
on banks to fall in line with official lending targets, the
official Securities Times reported on Wednesday.
[ID:nTOE60Q023]
                                
 The MSCI index of Asia Pacific stocks has tumbled nearly 9
percent in the past two weeks on concerns that the global
recovery could be losing momentum.
                                
 Besides worries that Chinese imports may slow as
policymakers try to keep the economy from overheating,
investors have been plagued by worries about Greece's high debt
levels and a proposal from the White House that could break up
some huge investment banks, which could slash their profits.
 Investors had been pricing in a smoother and stronger economic
recovery this year, which would justify higher share
valuations. Now that questions are growing about the pace and
depth of a recovery, share prices are seen as highly vulnerable
to a correction, especially after many global indexes have
rallied more than 60 percent from lows seen in March last year.
                                
 In recent weeks, the market has been most rattled by fears
that China's move to rein in soaring bank lending to curb
inflation and forestall asset bubbles could hamper global
growth.
                                
 But analysts believe such fears are overdone, saying
Beijing will largely stick to its pro-growth stance even though
it is keen to head off inflation risks and sharp boom-bust
swings in the economy.
                                
 "It is highly unlikely, in my opinion, that Beijing will
drive the economy into a growth recession just to contain
inflation," Stephen Jen,  managing director of macroeconomics
and currencies at Bluegold Capital Management, said in a note.
                                
 Shanghai shares <.SSEC> were little changed while Hong
Kong's main index rose 0.3 percent.
                                
 Taiwan stocks <.TWII> drifted lower after suffering their
worst one-day fall in six month the previous day due to fears
of further tightening from Beijing and a global bout of profit
taking in technology shares, which had helped lead the recent
equity rally.
                                
 South Korean shares <.KS11> fell 0.8 percent and the won
<KRW=> weakened after North and South Korean forces exchanged
artillery fire near the sea border, though analysts doubted the
clash between the rivals would escalate. [nTOE60Q019].
                                
 The dollar fell to a six-week low near 89.33 yen <JPY=>
with traders reporting dollar sales by Japanese exporters and
as the yen gained against some other currencies.
                                
 The Australian dollar <AUD=D4> rose to $0.9021 from $0.8984
after the fourth-quarter consumer price index (CPI) rose faster
than forecast as the cost of housing, recreation and food all
climbed. [ID:nSGE60O013].
                                
 The data set the stage for a fourth straight increase in
interest rates by the central bank at a meeting next week.
                                
 Gold prices <XAU=> steadied near $1,100 an ounce, supported
by consistent retail demand from Asia, while oil futures prices
<CLc1> drifted lower to around $74.78 a barrel.
  (Reporting by Kevin Yao; Editing by Kim Coghill)