Updates prices

By Tom Westbrook

SINGAPORE, July 30 (Reuters) -Oil prices hit seven-week lows on Tuesday as a softening demand outlook weighed on commodities, while bond, currency and stock markets traded cautiously ahead of central bank meetings in the U.S. and Japan and a slew of major corporate earnings reports.

Brent crude futures LCOc1 touched $79.36 as traders focused on worries over Chinese demand rather than tensions in the Middle East or Venezuela, and turned sellers. O/R

Copper and iron ore prices fell, and zinc and aluminium slipped to multi-month lows, while there was little by way of support from China's Politburo, which at its July meeting announced no new detailed efforts to boost the economy.

The S&P 500 has steadied .SPX after a two-week downturn and futures ESc1 were flat late in the Asia session.

European futures STXEc1 edged 0.1% higher, with moves kept small by the two-day policy meetings in Washington and Tokyo that loom over markets and wrap up on Wednesday.

Japan's Nikkei .N225, which dropped nearly 6% last week, was 0.1% lower in afternoon trade. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.4%.

A couple of individual stock moves were eye-catching, with a discounted block-sale dragging iron ore miner Fortescue FMG.AX down more than 9% in Australia. Shares of Standard Chartered 2888.HK rose 5% in Hong Kong after the lender lifted its earnings outlook and announced a $1.5 billion share buyback plan.

All eyes were on interest rates. Japanese government bond yields edged lower with the 10-year JGB yield JP10YTN=JBTC down 2.5 basis points at 1%. Ten-year U.S. Treasury yields US10YT=RR were steady at 4.186%. JP/US/

"The term 'calm before the storm' has been heard across the floors," said Chris Weston, head of research at Pepperstone in Melbourne. "This is a day for position management and to review broad exposures."

Markets are pricing almost no chance of a U.S. rate cut this week, but have fully priced a 25-basis-point reduction in the Fed Funds rate for September and so expect policymakers to sound dovish. FEDWATCH

In Japan, a broader range of outcome is on the table, with markets pricing a nearly 60% chance of a 10-basis-point rate hike and expecting to hear about how the Bank of Japan plans to edge its way out of an enormous bond-buying programme.

The dollar and yen drifted, but kept in fairly compact ranges after recent breakout moves.

The euro EUR=EBS bought $1.0821 and gentle pressure remained on the Australia dollar AUD=D3, which has been dragged lower by falling commodity prices. The Aussie, which bought nearly $0.68 less than three weeks ago, traded at $0.6557.

The yen JPY=EBS, which has rebounded sharply from a 38-year low of 161.96 per dollar hit early in July, hovered at 154.67 per dollar.

"We are at an interesting intersection for yen here," said Nathan Swami, head of currency trading at Citi in Singapore, with this week's central bank meetings possibly sketching a shift in the rates outlook and the yen's trajectory.

"It is too early to tell if the factors driving yen weakness have changed permanently. For now, this seems more like a short-term correction to the USD/JPY higher trend, but we feel there is downside risk that needs to be priced into a trade."

Later in the day, Microsoft MSFT.O and chipmaker AMD AMD.O will report earnings after the bell in New York, while preliminary CPI data is due in Germany and Spain.

Australian inflation data will also be released on Wednesday and the Bank of England is priced for a roughly even chance of a rate cut at its policy meeting on Thursday.

Editing by Shri Navaratnam and Sherry Jacob-Phillips

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