* Turkish rate hike has only brief impact
* Dollar down vs yen, focus turns to Fed tapering
* Fed expected to slice $10 billion more off monthly bond buys
* Norwegian crown down 1 percent after jobs data
By Patrick Graham
LONDON, Jan 29 (Reuters) - The yen inched higher against the dollar on Wednesday, suggesting emergency action to stabilise Turkey would not be enough to quell nerves over global emerging markets ahead of a U.S. Federal Reserve policy decision.
Among the G10 group of major currencies, the biggest move was a 1 percent fall for the Norwegian crown after unemployment rose to 3.5 percent, weakening the case for an early rise in interest rates.
The Fed’s launch last month of moves to stem the flood of dollars it is pumping into the global economy is behind the clearest trend so far in 2014 - a flight of money out of the developing world and into traditional safe havens like the yen and Swiss franc, and beyond that the dollar and the euro.
An emergency interest rate hike in Turkey had halted that move over the past 24 hours, but the lira soon began falling again. Another round of broader selling may follow if the Fed cuts another $10 billion off its monthly bond-buying later on Wednesday.
An influential PMI business survey due early on Thursday will also give a clearer indication of how much China’s economy is slowing - the other major risk to world growth this year.
“The situation does at least seem to have stabilised,” said Jens Pedersen, a commodities and foreign exchange analyst at Danske Bank in Copenhagen.
“But if we get another round of disappointing Chinese numbers then that is likely to weigh. Overall, we need to see a greater stabilisation of the Chinese economy before the market situation can settle.”
After recovering another half a percent against the yen overnight, the dollar retreated to be down 0.3 percent. The euro was almost unchanged at 1.3660
The Fed publishes its policy statement after the end of the European business day on Wednesday.
By close of trade on Monday, the emerging sell-off had knocked more than a trillion off the value of global stock markets in three days and despite the recovery nerves remain.
Further Fed tightening is bad news for the raft of economies - Turkey, South Africa and Argentina among them - that have become more or less dependent on the flow of cheaply borrowed dollars being put to work in higher-yielding assets.
While that tends to prompt investors in major currency markets to prefer the yen over the dollar, tapering also reduces the supply of new dollars being pumped into the system and is a vote of confidence in the U.S. economy.
Most banks are set positive on the dollar this year as a result, expecting the Fed to finish withdrawing the asset- purchase programme by the fourth quarter.
“(Tapering tonight) should allow USD strength to come through against the market’s preferred funding currencies of the franc, yen and Czech crown, and also against those overvalued commodity currencies such as the Canadian and Australian dollars,” ING bank said in a morning note.