* No big reaction in Asia to China's latest tightening
* Nikkei climbs, Chinese stocks softer, copper steady
* Euro off highs ahead of euro zone finance ministers'
meeting
By Ian Chua
SYDNEY, Jan 17 (Reuters) - Investors in Asia generally took
China's latest move to fight inflation in their stride on
Monday, with Japan's Nikkei posting modest gains, while the euro
slipped as the market waited to see if governments will beef up
a euro zone rescue fund.
Upbeat earnings from JPMorgan helped lift some
financial stocks in the region, but mining stocks struggled
after China on Friday raised banks' required reserves (RRR) for
the fourth time in over two months, fuelling worries the
country's voracious appetite for commodities will cool.
"With growth still strong, Beijing will likely battle
inflation wholeheartedly. Get ready for more hikes in both RRR
(at least another 150 bps) and interest rates (two, 25 bps) in
the next six months," HSBC economists Qu Hongbin and Sun Junwei
wrote in a report.
Japan's Nikkei index rose 0.4 percent, helped in
part by gains in financial shares. Sumitomo Mitsui Financial
Group climbed 0.7 percent.
"The market is recouping losses made last week and sentiment
has been brightened by financials gaining on a strong start to
the U.S. earnings season," said Yumi Nishimura, a senior market
analyst at Daiwa Securities Capital Markets.
Stocks elsewhere in Asia were more subdued, with MSCI's
index of Asia Pacific shares excluding Japan
slipping 0.3 percent.
Hong Kong's Hang Seng index , Australia's S&P/ASX 200
index and China's Shanghai Composite Index were
all lower. South Korea's KOSPI hit a record high at
2,118.86, before paring gains to be little changed on the day.
Global miners BHP Billiton and Rio Tinto
both fell about 1.0 percent.
According to EPFR Global, flows into the emerging market
equity funds that it tracks slowed in the week ended Jan. 12 due
to worries that high inflation rates will trigger more measures
to rein in price pressures.
But underlying appetite for risk persisted, with emerging
market local currency and high yield bond funds enjoying solid
weeks, EPFR noted.
Asian high-yield bond issuers have wasted no time this year
in taking advantage of the healthy appetite for their paper.
Last week, PRC property developer Evergrande Real Estate
Group made history with a 9.25 billion yuan ($1.4 billion)
synthetic renminbi bond issue, the biggest to date in the fast
growing market.
EURO ZONE MEETING EYED
The euro slipped to $1.3338 , having rallied some 4
percent last week to reach $1.3456 on Friday -- a high not seen
since mid-December.
European Central Bank President Jean-Claude Trichet's tough
talk on fighting inflation and expectations that the EFSF rescue
fund will be expanded had helped underpin euro.
All eyes are on whether euro zone finance ministers can
agree to boosting the fund, a key topic of discussion at their
meeting due to start later on Monday.
BNP Paribas strategists said it expects the euro to rise
towards $1.3600 in the weeks ahead and have changed their
strategy to buying the euro against the dollar on dips.
"However, this does not take away from our fundamentally
bearish EUR stance."
Commodity prices were little changed with U.S. crude
steady at $91.49 a barrel, not far off a two-year high of around
$92.58 set early this month.
Copper on the London Metal Exchange edged up 0.2
percent to $9,665 a tonne, not far from a record high of $9,754
set on Jan. 4.
U.S. markets are shut on Monday for a public holiday, but
the flow of earnings results will kick up a gear this week with
Apple , Citi and Goldman Sachs among major
firms due to unveil their results.
(Editing by Kim Coghill)
(Additional reporting by Antoni Slodkowski in Tokyo)
