(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 touched $79.36 as traders

focused on worries over Chinese demand rather than tensions in

the Middle East or Venezuela, and turned sellers.

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 after a two-week downturn

and futures were flat late in the Asia session.

European futures 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, which dropped nearly 6% last week,

was 0.1% lower in afternoon trade. MSCI's broadest index of

Asia-Pacific shares outside Japan fell 0.4%.

A couple of individual stock moves were eye-catching, with a

discounted block-sale dragging iron ore miner Fortescue

down more than 9% in Australia. Shares of Standard Chartered

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

down 2.5 basis points at 1%. Ten-year U.S. Treasury yields

were steady at 4.186%.

"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.

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 bought $1.0821 and gentle pressure

remained on the Australia dollar, 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, 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 ) and chipmaker AMD

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)