GLOBAL MARKETS-Asian stocks down on China policy fears

* Asian stocks ease as China ratchets up cash draining

* Chalco shares slip on Alcoa's disappointing results

* Nikkei hits 15-month high buoyed by resource-linked plays

* Dollar rises vs yen, euro on China sovereign fund comment

By Kevin Yao

SINGAPORE, Jan 12 (Reuters) - Asian stocks fell on Tuesday, a day after hitting a 17-month high, on investor jitters about tighter monetary policy in China, while the dollar rose after a Chinese sovereign fund official said the currency has bottomed.

Shares in Aluminum Corp of China (Chalco) <2600.HK>, fell as much as 4.7 percent Kong on disappointing results from U.S. aluminum producer Alcoa .

Alcoa Inc posted a narrower quarterly loss on Monday due to higher power bills and a weak dollar, but the results fell short of expectations and the aluminum producer's stock fell more than 5 percent. [ID:nLDE60B026]

The MSCI index of Asia Pacific stocks traded outside Japan <.MIAPJ0000PUS> shed 0.4 percent, after China's central bank stepped up its efforts to mop up money from the financial system. The Thomson Reuters index of Asian shares <.TRXFLDAXPU> was down 0.7 percent.

European stocks were expected to edge lower, adding to the previous session's dip. Financial spreadbetters saw Britain's FTSE 100 <.FTSE> to open 3 to 6 points lower, Germany's DAX <.GDAXI> to open up 1 point to down 4 points, and France's CAC-40 <.FCHI> to open 4 to 8 points lower. [ID:nLDE60B031]

The People's Bank of China on Tuesday raised the auction yield on one-year bills by a bigger-than-expected 8.29 basis points and drained a record 200 billion yuan ($29 billion) from the market, signalling a bias to tighten monetary conditions. [ID:nTOE60B02I]

"The rise in the auction yield today was much more than an average market forecast of a four-basis-point rise, meaning the central bank has stepped up its draining of liquidity even more strongly than the market had expected," said Dong Dezhi, senior money market analyst at Bank of China in Shanghai.

Last week, the bank had surprised markets by raising the interest rate on three-month bills for the first time since August, raising fears of a tightening cycle to head off economic overheating.

A HASTY ADVANCE?

Analysts expect the central bank to raise interest rates and let the yuan, pegged to the dollar, appreciate gradually later this year. But any harsh policy tightening appears unlikely in the near term.

Asian central banks and governments are expected to be tread cautiously in winding up fiscal stimulus and tightening monetary policy, given the lingering uncertainties in the global economy.

"I think markets may be getting a little ahead of themselves. We saw this back in 2009 with the Fed and look how that has panned out," said Selena Ling, head of treasury research and strategy at OCBC Bank in Singapore.

The benchmark Shanghai stock index <.SSEC> erased earlier losses and turned round sharply to a gain of nearly 2 percent while Hong Kong's index <.HSI> was unchanged.

Japan's Nikkei hit a 15-month high, lifted by resources stocks such as Sumitomo Metal Mining <5713.T> on higher gold prices, though tech stocks fell pressured by a stronger yen.

The dollar rose against the yen and the euro after a China sovereign fund official said the dollar has hit bottom and has limited room to fall further. [ID:nTOE60B02Z].

But the dollar gave up gains to as high as 92.43 yen after the official said the comments were his personal views.

Oil fell 43 cents to $82.09 a barrel, while gold hovered near 1,150 per ounce, a day after hitting a five-week high at $1,157.65 as data showed a sharp rise in China's commodities imports. (Editing by Jan Dahinten)