GLOBAL MARKETS-Asian stocks encouraged by China rally

* Investors anxious to see if China shares can extend their rally

* Japanese economic data mixed, leaves Nikkei with small gain

* Dollar consolidates recent gains ahead of US economic news

By Wayne Cole

SYDNEY, July 29 (Reuters) - Asian shares ticked higher on Tuesday as investors in the region drew encouragement from a rally in Chinese markets, though caution was widespread given the torrent of U.S. economic news still to come this week.

Hong Kong's key stock index hit its highest close in more than 3-1/2 years on Monday on optimism the world's second-largest economy has turned a corner and as investors wagered on more growth-friendly policies from Beijing.

The charge had been led by Chinese banks after a Reuters report said the country's fifth-biggest bank by assets planned to seek more private investors.

On Tuesday, MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.2 percent, with South Korea's index adding 0.6 percent.

Japan's Nikkei edged up 0.3 percent following some mixed economic news at home. While the availability of jobs in Japan rose to the highest in 22 years, household spending and retail sales both underwhelmed.

Wall Street provided little in the way of a lead as the major indices approached major chart barriers. The Dow rose 0.1 percent, while the S&P 500 gained a bare 0.03 percent, and the Nasdaq lost 0.1 percent.

Action was also lacking in currencies. The dollar held close to a six-month peak against a basket of its peers, having gone virtually nowhere as investors kept to the sidelines ahead of a policy review by the Federal Reserve.

The Fed is sure to cut its monthly bond-buying program by another $10 billion as it looks to wind up the scheme later in the year, but the focus for markets is on any clues to the timing of the first interest rate hike.

With other key data such as U.S. gross domestic product and the closely watched non-farm payrolls report still to come, investors were content to sit on their hands.

The euro was likewise pinned near an eight-month trough of $1.3421 set on Friday. It traded at $1.3438, having shuffled between $1.3427 and $1.3440.

Against the yen, the dollar was steady at 101.85, while the common currency barely budged at 136.84.

In commodities, gold was idling at $1,304.44 after a very quiet 24 hours saw it hold to an $8 range.

Oil prices dipped as signs of excess supplies of North Sea and West African crude and weak demand in Europe and Asia offset fears of escalating tensions in Ukraine and the Middle East.

September Brent lost 7 cents to $107.50 a barrel, while U.S. crude futures eased 24 cents to $101.43.

(Editing by Kim Coghill)