RPT-GLOBAL MARKETS-Asia stocks extend rally, oil rises to $75

* Pressure eases in credit market, volatility drops

* Focus on what policymakers will do for economies

* CITIC Pacific stock plunges 45 pct on possible FX loss (Repeats to more subscribers)

By Kevin Plumberg

HONG KONG, Oct 21 (Reuters) - Asian stocks rose on Tuesday, boosted by signs that government efforts to push down short-term lending rates were working and comments by Federal Reserve Chairman Ben Bernanke backing more government spending to stimulate the ailing U.S. economy.

Oil prices climbed back above $75 a barrel on expectations OPEC will cut output to boost prices, which have fallen nearly 50 percent in the last three months, at a meeting on Friday.

The outcome will be intensely watched since lower energy prices have been a relief for policymakers and consumers alike facing a sharp global slowdown.

With money markets appearing to loosen up, investors have turned their attention to policymakers' efforts to brace their economies for a potential global recession. India's central bank cut rates by a percentage point ahead of a scheduled meeting on Monday and the Chinese government announced a series of initiatives to support growth over the weekend.

Expectations that central banks around the world will have to catch up with the Fed's cumulative 3.75 percentage points of rate cuts since the financial crisis began more than a year ago bolstered the U.S. dollar.

"Market action confirmed that the worst has been avoided amid government bailout plans announced last week," said Dariusz Kowalczyk, chief investment strategist with CFC Seymour in Hong Kong.

"A global recession is unavoidable, volatility will continue and there will be more losses in equity and credit markets, but investors can focus on traditional fundamentals rather than viability of the system," he said in a note.

Japan's Nikkei share average .N225 climbed 2.65 percent, having now retraced a quarter of the steep decline in the last month in the last few days.

The MSCI index of Asia-Pacific stocks outside Japan .MIAPJ0000PUS rose 1.8 percent. The index remains down 18 percent so far in October and 50 percent in the year to date.

South Korea's benchmark KOSPI ticked up 0.7 percent after briefly touching a three-year low on Monday. The domestic market received a boost in confidence after the government announced a $130 billion plan to stabilise its financial sector.

The Korean government said on Tuesday it was planning to guarantee $100 billion worth of foreign currency debts owed by 18 banks, some of whom will be posting their quarterly results in the next few weeks.

Hong Kong's Hang Seng index .HSI rose 1 percent, led by offshore oil firm CNOOC (0883.HK), which climbed nearly 6 percent on higher crude prices. But conglomerate CITIC Pacific (0267.HK) plunged 45 percent after its surprise warning of potential foreign exchange-related losses of nearly $2 billion, weighing on the broader market.