* Most Asian markets edge down; Nikkei falls on profit-taking
* European markets seen opening steady
* Euro close to 6-week high vs dollar, 5-year high vs yen
* Three Fed officials comment on stimulus reduction
* China data reassures investors worried about slowdown
* Investors cautious ahead of Fed policy meeting next week
By Lisa Twaronite
TOKYO, Dec 10 (Reuters) - Stocks saw their gains unravel in Asian trade on Tuesday, while tighter money market conditions in the euro zone helped the euro climb to a five-year peak against the yen and a six-week high against the dollar.
European shares appeared to be headed for a steady open, with financial spreadbetters predicting both Germany's DAX and France's CAC 40 to open flat and Britain's FTSE 100 to fall as much as 0.1 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.1 percent, though the session's moves were small as trading was cautious ahead of next week's U.S. Federal Reserve meeting.
The Nikkei stock average gave up 0.3 percent, pulling back from a one-week high as investors booked gains before the year-end, though Japan's benchmark was still on track for its best yearly performance since 1972.
Signs of improvement in the global economy have provided fitful support to riskier assets in recent weeks as markets have been buffeted by uncertainty over the Fed's tapering timeline.
A spate of data released by China late in the session reassured investors worried that the world's second-largest economy might be slowing. Industrial output rose 10.0 percent in November from a year earlier, slightly shy of market expectations, but retail sales were up a stronger-than-expected 13.7 percent, the National Bureau of Statistics said.
Fixed-asset investment, an important driver of China's economic activity, climbed 19.9 percent in the first 11 months from the same period last year, the bureau said.
"It's hard to see this causing any anxiety to the authorities or causing them to see the need for policy change," Tim Condon, economist at ING in Singapore, said about the Chinese data.
"Growth is about where it was the previous month. The economy is humming along and there is no need for growth upgrades or growth downgrades," he added.
The euro was up about 0.2 percent at 142.09 yen after rising as high as 142.19 yen, its highest since October 2008. Against the dollar, the euro rose 0.1 percent to $1.3749 , after rising as high as $1.3768 and moving towards its two-year peak of $1.3833 set in October.
The dollar inched up slightly to 103.35 yen, not far from its five-year high of 103.74 yen touched in May.
Almost two-thirds of Japanese firms expect the Bank of Japan will increase its stimulus in the first six months of 2014, a Reuters poll showed on Tuesday, keeping pressure on the yen.
"Expectations of further BOJ easing in 2014 appear to be building, as reflected in recent Japanese yen weakness," strategists at UBS wrote in a note.
They said net buying of Japanese equities by UBS clients rose last month to its highest level since May and that Japan was the most favoured region among its clients over both the last four and 12 weeks.
ECB, FED POLICY
The euro was bolstered by rising short-term interest rates in the euro zone money market as chances of more easing by the European Central Bank faded, though analysts say the central bank's operations are likely to avert any credit crunch.
"Tensions in the liquidity market are set to remain until year-end," strategists at Barclays said in a note to clients. "But a 'liquidity accident' is unlikely as the full allotment at the ECB's operations is an important backstop," they added.
ECB Executive Board member Yves Mersch on Monday played down the prospect of asset purchases, saying such action poses immense challenges for the central bank.
The Fed is expected to begin tapering its own asset purchases in March, a Reuters poll showed on Monday, but some economists now say that it might do so as early as this month or next. The U.S. central bank will hold its next regular policy meeting on Dec. 17-18.
Several Fed officials on Monday also lent credence to the idea that a U.S. stimulus reduction was on the near-term horizon.
St. Louis Fed President James Bullard said the Fed could slightly reduce its monthly bond purchases this month in reaction to signs of an improved labour market, while Dallas Federal Reserve Bank President Richard Fisher said tapering should start next week. Meanwhile, Richmond Fed President Jeffrey Lacker said further stimulus is unlikely to do much to help the U.S. economy.
Bullard is a voting member of the policy-setting Federal Open Market Committee this year. He recently said a strong payrolls number would raise the chance of tapering in December, and the latest report released last Friday showed employers hired more workers than expected in November, driving the jobless rate to a five-year low of 7.0 percent.
On the commodities front, U.S. crude oil prices rose 0.5 percent to $97.79 per barrel on expectations of a second weekly drop in U.S. crude inventories.
Spot gold rose to $1,245.70 an ounce, after gaining over the last two sessions on short-covering, technical-selling and some fund-buying.
Copper was steady at $7,137.25 a tonne, near a one-month high as steady consumer buying from China put a floor under prices.