* No clear direction, with China stocks choppy
* Chinese banks on tap to report results
* Metals edge up, oil climbs above $70 on inventories (Repeats to more subscribers)
By Kevin Plumberg
HONG KONG, Aug 19 (Reuters) - Asian stocks edged up on Wednesday but hovered near three-week lows hit the previous day, with investors cautious ahead of Chinese bank results and wary that profit taking will continue to stall a six-month rally.
Equities, metal prices and cyclical currencies like the Australian dollar saw modest bounces, but investors were prone to slashing their bets on riskier assets after shares in Shanghai fell 16 percent in the last two weeksm, rattling global markets.
China has become the focal point of investors, with volatility in domestic markets rising on fears that the days of easy money are coming to end. But how much this is tied to doubts about China's recovery and what extent that affects the rest of the world beyond sentiment is uncertain.
"There is still a great deal of confusion of the link between China's recovery and its domestically focused growth model and the notion that China can save the world," said Patrick Bennett, Asia foreign exchange and rates strategist with Societe Generale in Hong Kong, in a note.
"If there remain expectations or pricing or positions on the latter notion, then this developing risk consolidation/reversal must have further to run."
Crude oil rose by a $1 to $70.18 a barrel on a sharp drawdown in U.S. inventories last week, but remained near the top of its summer trading range.
U.S. stock markets rose around 1 percent overnight, rebounding from sharp losses on Monday, as better-than-expected results from big retailers encouraged investors to get back into the market. [.N]
But analysts remain worried about weak consumer demand. Many firms which have beat or met market expectations this earnings season have done so by cutting costs, not by moving more goods out the door.
The MSCI index of Asia Pacific stocks outside Japan ticked up 0.4 percent in morning trade on Tuesday. However, support from the materials sector, which has led the rally in regional markets, was fading.
The Shanghai composite <.SSEC> slipped 0.3 percent after hitting a two-month low on Tuesday, weighed by metals and minerals producers.
Short-term trading signals have moved swiftly from reflecting overbought conditions 12 trading days ago to now being slightly oversold.
Bank of Communications <3328.HK><601328.SS>, the country's fifth-largest lender, will kick off Chinese bank first-half results on Wednesday, followed by two of the world's biggest banks by market value later in the week: Industrial and Commercial Bank of China <1398.HK><601398.SS> and China Construction Bank <0939.HK><601939.SS>.
Pressure on net interest margins is expected to hurt the banks' results despite barely receiving a scratch from the global credit crisis.
Investors will also be keen on any clues for second-half loan growth amid concerns Beijing has been trying to curb red-hot lending to avoid overstimulating the economy as it recovers. [ID:nPEK217845]
Japan's Nikkei share average <.N225> dipped 0.2 percent, hurt by weakness in retailers and real estate stocks, but Sanyo Electric <6764.T> surged as much as 17 percent after a source said it would sell batteries for hybrid cars to Toyota. [.T]
The Australian dollar still remained largely shackled to the whims of Chinese stocks, given the strengthening trade ties between the countries.
The Australian dollar rose 0.2 percent in choppy trade to
US$0.8276
The U.S. dollar was largely unchanged against the euro and
yen after a small dip overnight as Wall Street recovered. The
euro was at $1.4141
Three-month copper traded