GLOBAL MARKETS-Emerging market rout pauses ahead of Turkey, Fed meetings

* Asian shares stabilise for now

* Investors look to Turkey central bank policy meeting

* Markets worry Fed tapering may undermine emerging markets

* China slowdown another concern

* Indian central bank surprises with rate hike, rupee steady

By Marc Jones

LONDON, Jan 28 (Reuters) - Emerging markets steadied after three days of intense selling on Tuesday, as investors waited to see if Turkey, one of the epicentres of the rout, would hike interest rates to defend its battered lira.

Investors have been shaken this week by a huge sell-off in so-called risk assets. They have been hit by jitters about the withdrawal of U.S. monetary stimulus, slowing Chinese growth and country-specific political tensions.

The calmer conditions in Asia meant European shares .FTEU3 and periphery euro zone government bonds were able claw back some recent lost ground, but confidence remained brittle. This week's Federal Reserve meeting also made traders reluctant to place big bets.

But the immediate focus was on whether the central bank of Turkey would bow to market pressure and hike interest rates at an emergency policy meeting later.

India surprised markets earlier by doing just that and despite its reluctance to unsettle Turkish voters ahead of this year's elections, a new Reuters poll showed analysts now expect the central bank to lift rates 225 basis points. News Search ID:nL5N0L12WD

The Turkish lira TRYTOM=D3 remained volatile ahead of the decision, trading at 2.2640 liras to the dollar, though it kept some distance from the record low of 2.3900 hit on Monday.

Istanbul's main stock market .XU100 , which has lost almost 20 percent over the last four months, also rose, climbing 1 percent to help MSCI's main emerging market index .MSCIEF see its first gains in three sessions.

"We think there is room for the central bank to use more conventional monetary policy and that is clearly what the market expects," said Fergus McCormick, head of sovereign ratings for rating agency DBRS.

FED FOCUS

Slowing sales at gadget giant Apple AAPL.O had prompted an 6 percent fall in its shares overnight but European shares were helped away from near one-month lows by higher first-quarter profits at engineering behemoth Siemens SIEGn.DE . Href="NewsSearch">.EU

Investors also drew some comfort from the news that a Chinese trust firm had reached an agreement to resolve a troubled high-yield investment product, just days away from what could have been a precedent-setting default in China's alternative, non-bank lending system. News Search ID:nL3N0L12CH

"The deal to avert default is a source of relief for many, but it's a clear warning on the scale of the risks that still remain with other trust products due to mature this year," said Jackson Wong, Tanrich Securities' vice-president for equity sales in Hong Kong.

Major currencies marked time ahead of the conclusion of Fed's policy meeting on Wednesday, with both the euro and the yen little-changed at $1.3661 EUR= and 103.12 yen to the dollar respectively. Href="NewsSearch">FRX/

Despite the market turmoil of the last week, expectations are still for the bank to slice another $10 billion of the $75 billion it spends each month on buying U.S bonds to help the banking system and economy strengthen.

Among commodities, gold slipped on the slight recovery in risk appetite while growth-attuned copper and oil also clawed back some of their losses. Gold XAU= was last at $1,254 an ounce while Brent oil LCOc1 was hovering up 0.5 percent at $107.26 a barrel.

(Editing by Jeremy Gaunt)

 
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Keywords: MARKETS GLOBAL/