* Nikkei on the rise as yen falls, dollar gains on Fed
* China money rates ease after PBOC floods market with cash
* New Zealand nearer to rate hike as inflation creeps higher
By Wayne Cole
SYDNEY, Jan 21 Asian markets sprang higher on
Tuesday as Japanese stocks rebounded and Chinese money rates
eased, while the U.S. dollar got a fillip from a report the
Federal Reserve would again trim its bond buying next week.
A drop in the yen helped Tokyo's Nikkei rally 1.5
percent and dragged up markets from Seoul to Singapore. MSCI's
broadest index of Asia-Pacific shares outside Japan
swung round to be 0.5 percent firmer.
U.S. stock futures were also pointing higher, with the S&P
500 up 0.4 percent and the Dow 0.5 percent.
Investors kept a wary eye on Chinese money markets after the
People's Bank of China (PBOC) announced a surprise injection of
funds on Monday aimed at curbing a recent spike in rates.
The central bank followed up on Tuesday by adding 255
billion yuan ($42.13 billion) to markets, the largest single-day
injection since February 2013.
"Such a huge injection," exclaimed one trader at a
joint-stock bank in Shanghai. "Now we can get through the
upcoming Lunar New Year holiday in peace."
The move duly pulled the 7-day bond repurchase rate down to
5.53 percent, from 6.60 percent on Monday, and
boosted Shanghai stocks 0.6 percent.
Dealers assume the authorities were attempting to avoid a
repeat of the severe cash crunch that roiled markets in June.
Likewise, investors will be watching liquidity operations by
the European Central Bank later Tuesday to see if it acts to
correct a recent sharp rise in money rates, a tightening of
conditions that could retard the region's recovery.
The euro edged back a touch to $1.3544, not far from
Monday's two-month trough of $1.3508.
The dollar hopped up to 104.66 yen when the Wall
Street Journal reported the Fed is on track to trim its
bond-buying program for the second time in six weeks, paring
back by $10 billion to $65 billion a month.
A lacklustre U.S. jobs report had not diminished the central
bank's confidence in the economy, wrote Fed watcher Jon
Hilsenrath. Investors suspect he has an inside line to policy
makers and put a lot of weight on his opinion.
It was enough to nudge 10-year U.S. Treasury yields up a
couple of basis points to 2.84 percent, following
the U.S. market holiday on Monday.
The early mover in Asia had been the New Zealand dollar
which surged half a U.S. cent to $0.8320 after
inflation data came in higher than expected and fuelled already
intense speculation of a rate rise.
Annual inflation ticked up to 1.6 percent in the fourth
quarter of 2013, the fastest pace in 21 months.
The country of 4.5 million is undergoing an economic
revival, thanks in large part to China's insatiable demand for
its dairy exports, and particularly baby formula.
That has greatly lessened the need for rates to remain at
record lows of 2.5 percent and led markets to price in a series
of hikes this year.
The Reserve Bank of New Zealand next meets on Jan. 30 and if
it does not move then, an increase is considered virtually
certain for March.
Attention will also be on Turkey's central bank as a
crumbling currency piles pressure on for a hike in interest
rates at its policy meeting on Tuesday.
The lira has hit a string of record lows while
the cost of insuring Turkish debt spiked to 18-month highs as a
government corruption scandal undermined investor confidence.
In commodity markets, gold steadied at $1,252.41 an
ounce, after hitting its highest level since mid-December at
$1,259.85 on Monday.
U.S. crude futures slipped as supply worries eased after
world powers and Iran took another step to end a decade-long
dispute over Tehran's nuclear programme.
Crude futures fell 37 cents to $94.00 a barrel, while
Brent oil for March delivery edged up 8 cents to