* Japan's Nikkei bucks regional downtrend on weaker yen,pension fund shift
* Downbeat China manufacturing report saps investors' riskappetite
* Euro rises vs yen but well below 4-year peak touched onWednesday
* BOJ holds policy steady as expected
By Lisa Twaronite
TOKYO, Nov 21 (Reuters) - Downbeat China manufacturingactivity added to gloom in most Asian stock markets on Thursday,while emerging market currencies faltered as the dollar chargedahead after the U.S. Federal Reserve's latest minutes hinted atstimulus tapering.
Europe was poised to follow Asia lower, with financialspreadbetters expecting Britain's FTSE 100 to openaround 0.3 percent lower, Germany's DAX and France'sCAC 40 each off as much as 0.5 percent.
MSCI's broadest index of Asia-Pacific shares outside Japan shed about 1.2 percent, at one point touchingits lowest point since late last week. The softer Chinamanufacturing and Fed speculation also weighed on emergingmarket currencies, sending the Indonesian rupiah to its lowestmark in nearly five years.
But Japan's Nikkei stock average bucked the region,surging 1.9 percent as the yen weakened to a four-month lowagainst the dollar, and on plans by a major government fund toinvest more of its $2 trillion funds in riskier assets.
Activity in China's vast factory sector grew at a milderpace in November on shrinking new export orders, the preliminaryprivate Flash Markit/HSBC Purchasing Managers' Index (PMI)showed, raising concerns that China's economy could lose somevigour in the fourth quarter.
A sub-index measuring new export orders fell to athree-month low of 49.4 in November from 51.3 in October,reflecting weak external demand from developed countries.
"It's pretty well known that China's economy is slowingdown, but the flash PMI was a bit weaker than expected so it wasa factor for the correction today," said Larry Jiang, chiefstrategist at Guotai Junan International Securities.
In the Oct. 29-30 Fed policy meeting minutes released onWednesday, officials indicated that they could decide to startscaling back the asset purchases at one of their next fewmeetings provided this was warranted by economic growth.
"The headline that most participants saw tapering in thenext couple of meetings cannot be much of surprise, since thealternative is a virtual indefinite postponement," StevenEnglander, global head of G10 FX strategy at CitiFX, wrote in anote to clients.
The dollar index, which tracks the greenback against abasket of major currencies, rose slightly to 81.149 afterit climbed 0.4 percent on Wednesday, marking its biggest one-daygain in about two weeks.
The dollar added about 0.7 percent against its Japanesecounterpart, buying 100.70 yen, after earlier rising ashigh as 100.83 yen, its loftiest level since late July.
The euro gave up about 0.1 percent to $1.3428.
It was also buying 135.27 yen, recovering 0.7 percenton the day but still off a four-year high of 135.94 yen touchedon Wednesday.
The single currency plunged on Wednesday after a Bloombergreport said the ECB was considering cutting its deposit rate,one of its two key interest rates, to below zero. An ECBspokesperson declined to comment on the report.
The Aussie dollar hit a one-week low of $0.9291 onthe factory survey outcome from China, Australia's biggestexport market. It last stood at $0.9302.
The Bank of Japan maintained its ultra-loose monetary policyat the end of its two-day meeting on Thursday as widelyexpected, and reiterated the economy is moderately recovering.
Markets are focusing on what Governor Haruhiko Kuroda willsay in his post-meeting news conference about speculation ofmore easing by the ECB and uncertainty about when Fed will slowits asset purchases.
In commodities trading, Brent crude oil gave upearlier gains and slipped 0.3 percent to $107.73. It surged bymore than $1 a barrel in the previous session after a U.S.official said it would be "very hard" to get a nuclear agreementwith Iran this week.
U.S. oil futures for January delivery shed about 0.3percent to $93.59, after reversing gains on Wednesday followingrelease of the Fed minutes.
Three-month copper on the London Metal Exchange fellby about 0.1 percent to $6,987 a tonne, pressured by thetapering concerns and the softer China manufacturing.
Spot gold edged up to $1,247.81 but was still tradingnear four-month lows after its biggest drop in seven weeks inthe previous session.
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