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* Dollar rises further, holds above 7-week low vs yen
* Indian rupee, Turkish lira rebound as sell-off pauses
* Turkish central bank stems tide by calling emergency meeting
* Fed meeting may be next trigger for emerging worries
(Updates market action, adds quotes, changes dateline)
By Richard Leong
NEW YORK, Jan 28 (Reuters) - The dollar rose modestly against the yen and euro on Tuesday as investors stepped back into stock and emerging markets whose recent sell-off drove money into safehaven currencies.
The greenback might receive another boost if the U.S. Federal Reserve were to further pare its bond-purchase stimulus despite data suggesting the domestic economy lost some momentum at the end of 2013, analysts said.
U.S. central bank officials will begin a two-day policy meeting later Tuesday, where analysts expect the Fed would decide to reduce its monthly bond purchases in February by $10 billion to $65 billion.
Such a move is perceived as positive for the dollar since it would reduce the amount of cash the Fed injects into the banking system, although the Fed's tapering which began in December has hurt emerging market currencies because the dollars created had flooded into fast-growing nations in Asia, Africa and Latin America.
"The Fed is squarely focused on the domestic economy. It will continue to taper," said Russ Koesterich, global chief investment strategist at BlackRock in San Francisco, which manages $4.1 trillion.
"The volatility in emerging markets is not over. It will be with us for some time. There are still structural problems with some of these markets," Koesterich added.
The central banks of some key emerging economies sought to soothe investor concerns.
The Indian rupee
Later Tuesday, Turkey's central bank is expected to raise its lending rate to about 10 percent at an emergency meeting in a bid to halt the slide of its currency
The rupee improved 0.9 percent against the dollar at 62.51 rupees per dollar, while the Turkish lira gained about 0.6 percent against the dollar at 2.27 liras.
The recovery in emerging market currencies helped lift global stock prices with the MSCI world index
The dollar in the meantime held steady against the euro and recovered further against the yen in the wake of much weaker-than-expected readings on U.S. durable goods orders in December.
The dollar
The euro
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Graphics
U.S. durable goods
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The durable goods data were mitigated by a stronger-than-expected January pickup in U.S. consumer confidence and an in-line growth in U.S. home prices in November.
The surprise December drop in durable goods raised some doubts whether the Fed tapered its third round of quantitive easing too soon.
"They began tapering not because they saw the economy on a firmer footing but rather because they were concerned with the rapid rise in the Fed's balance sheet with little to show for it in economic strength," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York.
"The markets, especially emerging markets, are taking the view that tapering is as good as ending or reversing QE," Borthwick said.
As investors await the Fed's next move, they dipped their toes back into stocks and commodity-linked currencies such as the Australian dollar.
Worries over how the Australian economy will hold up in the face of slackening commodity markets and a slowdown in China were eased somewhat by the NAB measure of business conditions, which jumped to its highest in more than 2-1/2 years.
The Aussie dollar rose to $0.8798
(Additional reporting by Steven C. Johnson in New York, Patrick Graham in London; editing by Andrew Hay)
((richard.leong@thomsonreuters.com)(+1 646 303 6313)(Reuters Messaging: richard.leong.thomsonreuters.com@thomsonreuters.net)(Twitter @RichardLeong2))
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Currency bid prices at 12:00PM (1700 GMT)
Description RIC Last U.S. Close
Previous
Session Pct Change YTD Pct
Change High Bid Low Bid
Euro/Dollar EUR= $1.3658 $1.3670 -0.09% -0.63% +1.3688 +1.3630
Dollar/Yen JPY= 102.8000 102.5400 +0.25% -2.23% +103.2500 +102.4900
Euro/Yen EURJPY= 140.40 140.20 +0.14% -3.25% +140.9800 +140.1800
Dollar/Swiss CHF= 0.8985 0.8962 +0.26% +0.64% +0.9010 +0.8955
Sterling/Dollar GBP= 1.6580 1.6584 -0.02% +0.15% +1.6624 +1.6537
Dollar/Canadian CAD= 1.1146 1.1113 +0.30% +4.95% +1.1177 +1.1078
Australian/Dollar AUD= 0.8766 0.8735 +0.35% -1.65% +0.8820 +0.8727
Euro/Swiss EURCHF= 1.2273 1.2255 +0.15% +0.02% +1.2283 +1.2251
Euro/Sterling EURGBP= 0.8235 0.8248 -0.16% -0.75% +0.8251 +0.8217
NZ Dollar/Dolar NZD= 0.8253 0.8229 +0.29% +0.57% +0.8304 +0.8221
Dollar/Norway NOK= 6.1325 6.1458 -0.22% +1.09% +6.1630 +6.1313
Euro/Norway EURNOK= 8.3770 8.4054 -0.34% +0.46% +8.4269 +8.3736
Dollar/Sweden SEK= 6.4292 6.4189 +0.05% +0.11% +6.4679 +6.4098
Euro/Sweden EURSEK= 8.7824 8.7781 +0.05% -0.94% +8.8224 +8.7578
All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX World central bank news CEN
Economic Forecasts... ECON Official rates...INT/RATE
Forex Diary.......MI/DIARY Top events........M/DIARY
Diaries...........DIARY Diaries Index........IND/DIARY
Press Digests.....PRESS Polls on G7 economies..SURVEY/
European markets......MARKETS/))))
Keywords: MARKETS FOREX/