* China central bank injects cash for 1st time since late Feb * European shares set to open higher * Japan's Nikkei gains as yen strength wanes * Dollar index gains, moves away from five-week low * Aussie dollar skids after RBA chief hints at rate cut By Lisa Twaronite TOKYO, July 30 (Reuters) - Asian stocks edged up on Tuesday after China's central bank injected funds into money markets for the first time since February, while the dollar index moved off a five-week low as investors positioned for the Federal Reserve's policy meeting. European shares were set to open higher on Tuesday, tracking gains in Asia and on expectations of more strong company results, with more than 40 major European companies scheduled to announce earnings. Financial spreadbetters predicted Britain's FTSE 100 to open 24 to 27 points higher, or as much as 0.4 percent; Germany's DAX was seen gaining 28 to 29 points, or as much as 0.4 percent; and France's CAC 40 was seen rising 13 points, or 0.3 percent. China's central bank injected funds into money markets via its open market operations, helping alleviate fears of another cash crunch ahead of the month-end after a severe cash squeeze in late June that caused market panic and knocked shares lower. The Shanghai Composite Index rose 0.7 percent, while Hong Kong's Hang Seng Index rose 0.2 percent. "The PBOC (People's Bank of China) cash injection was a positive today, but I don't think it will be anything more than a short-term lift for the Chinese banking sector," said Linus Yip, a strategist at First Shanghai Securities. EYE ON FED, PAYROLLS Other central banks take centre stage this week as investors wait to see whether Fed officials lay the groundwork for paring their $85 billion-a-month bond purchase programme as early as September. The Bank of England and the European Central Bank also hold policy meetings this week. The U.S. payrolls report on Friday is also in focus, as an improving labour market would help determine the timing of any Fed stimulus reduction. The report is expected to show 185,000 jobs were added in July, and the jobless rate dipped to 7.5 percent. An upbeat report would lend credence to speculation the Fed will start tapering its stimulus in September, and would likely give the dollar a further lift. "We've been seeing very subdued activity from clients, as it's quite obvious people are waiting to see what comes out of the U.S. for further direction," said Bart Wakabayashi, head of forex at State Street Global Markets in Tokyo. "There's a bit of a consensus that the recent sell-off in dollar/yen and equity markets seems like a prelude to some kind of dovish remark from the FOMC, and we'll be right back where we were three days ago," he said. Data showed Japanese industrial output in June fell 3.3 percent from May, the first drop in five months, but analysts still see the economy on track for a gradual recovery. Japan's jobless rate fell below 4.0 percent for the first time in more than 4-1/2 years and the availability of jobs hit the highest in five years, boding well for the government's efforts to revive the economy and end deflation. On Wall Street on Monday, all three major indexes moved lower, while European shares finished the day mostly flat. DOLLAR GAINS, AUSSIE SLIDES Against the yen, the dollar gained 0.3 percent to 98.28 yen , moving away from Monday's trough of 97.61 yen, which was the lowest in nearly a month. The euro edged down against the greenback to $1.3258. That contributed to the dollar index's rise of 0.1 percent to 81.766, moving away from a five-week low of 81.499 hit on Monday. The Australian dollar plunged more than half a U.S. cent after the central bank governor said inflation would be no bar to a cut in interest rates and that the local currency could fall further. It hit a two-week low of $0.9059, and was last down 1.4 percent at $0.9072. Commodities were under pressure ahead of the Fed meeting and on concerns about the economic outlook in China. Analysts polled by Reuters forecast China's manufacturing sector may have contracted in July for the first time in 10 months, signalling a protracted slowdown in the world's second-largest economy. Copper fell about 0.4 percent to $6,851.50 a tonne, while U.S. crude lost 0.1 percent to $104.40 a barrel. Spot gold was little changed as traders shied away from taking big bets ahead of the Fed meeting, edging down to $1,325.41 an ounce.