By Rae Wee

SINGAPORE (Reuters) - Asian shares edged up on Tuesday thanks to a bounce in battered Chinese markets, but elsewhere investors were cautious amid diminishing expectations of a near-term Federal Reserve rate cut, which in turn underpinned the dollar.

The Australian dollar jumped after the country's central bank retained a tightening bias at the conclusion of its policy meeting and warned against imminent rate cuts, joining the Fed chorus of caution.

MSCI's broadest index of Asia-Pacific shares outside Japan rose more than 0.8%, reversing a 0.7% decline from the previous session.

That was helped by a sharp rise in Chinese stocks, as recent signs of support from state-backed investors and moves from authorities helped stem heavy losses in the market.

The blue-chip CSI300 Index jumped more than 1.5%, while gained 0.8%, after having plumbed a five-year low on Monday. [.SS]

China's state fund Central Huijin Investment said on Tuesday it has expanded its scope of investment in exchange-trade funds (ETFs), according to a statement on its website.

The same day, China's securities regulator said it will guide institutional investors to raise stock investment and encourage listed companies to increase share buybacks.

"We estimate the National Team has bought roughly RMB 70 billion of A shares in the past month, but RMB 200 billion is perhaps the minimum to stabilize the market," said analysts at Goldman Sachs, referring to the coined term for Chinese state-backed investors.

Hong Kong's surged more than 3%, while slid 0.22%.

Data on Monday showed the U.S. services sector growth picked up in January as new orders increased and employment rebounded, adding to growing doubts about the slew of Fed rate cuts priced in for this year, which had already been dialled back in the wake of Friday's blockbuster U.S. jobs report.

That kept the dollar propped close to more than a two-month high against the euro and the yen.

The single currency last bought $1.0750, while the yen stood at 148.41 per dollar. [FRX/]

HAWKISH TONE

Down Under, the Reserve Bank of Australia (RBA) on Tuesday held interest rates steady as expected, but cautioned that a further increase could not be ruled out given inflation was still too high and it needed to see more evidence that price pressures were cooling.

That sent the up more than 0.4% to $0.6513, as futures pushed out the likely timing of a first easing to later in the year.

"Whilst few suspect another hike could follow, it has helped lift (the Aussie) from arguably oversold levels following strong economic data from the U.S.," said Matt Simpson, senior market analyst at City Index.

"Like Fed watchers, traders are now obsessing over when the RBA's first cut will arrive, over if they will hike again this cycle."

Fed expectations remained the main driver of market moves as investors come to terms with the likelihood of U.S. rates staying higher for longer than initially expected.

That kept U.S. Treasury yields elevated, with the two-year yield, which typically reflects near-term interest rate expectations, hovering near Monday's one-month high. It was last at 4.4390%. [US/]

Market pricing shows roughly 115 basis points of easing by the Fed this year, down from over 150 bps at the end of last year.

Bets for a March rate cut have also largely been priced out, and investors have lengthened the odds for one in May.

"What does worry us, though, is whether the ongoing strength of the U.S. job market in January means that the U.S. consumer will stay strong, thereby undoing the disinflationary trend, and extending tight monetary policy more indefinitely," said Thierry Wizman, global FX and rates strategist at Macquarie.

In commodities, oil prices held largely steady as traders took stock of a visit to the Middle East by U.S. Secretary of State Antony Blinken to discuss a ceasefire offer in the region.

rose 17 cents to $72.95 a barrel. futures gained 19 cents to $78.18 [O/R]

Gold rose 0.07% to $2,026.16 an ounce. [GOL/]