* European markets seen opening sharply lower
* U.S. stock futures edge up, suggesting selloff could abate
* Fears of impact of China's credit tightening weigh on markets
* Focus also on this week's Fed's meeting, expected stimulus reduction
* Dollar, euro claw back ground after touching 7-week lows against yen
By Lisa Twaronite
TOKYO, Jan 27 (Reuters) - Asian shares dived on Monday as emerging markets remained under pressure, with the U.S. Federal Reserve poised to continue tapering stimulus and tighter credit conditions in China raising fears of a sharper economic slowdown.
The losses were expected to spill over into Europe, with financial spreadbetters expecting Britain's FTSE 100 to open down as much as 1.3 percent; Germany's DAX as much as 0.8 percent; and France's CAC 40 0.8 percent.
"With the U.S. Federal Reserve looking increasingly likely it could announce a further $10 billion tapering of its asset purchase program this week, it seems quite likely that today's European market open could be a pretty volatile affair, with a sharply lower open expected," said Michael Hewson, chief strategist at CMC Markets, in a note to clients.
But U.S. stock futures suggested the selloff might abate later in the session. S&P 500 E-mini futures edged up 0.3 percent after the Standard & Poor's 500 index shed 2.0 percent on Friday, when all three major stock indexes dropped for a second consecutive session.
The Philippine peso and Malaysian ringgit both fell to their lowest levels since 2010 on Monday as emerging market assets came under pressure across the board.
"The market is definitely focusing on EM, particularly the weak EM countries," said Jeffrey Halley, FX trader for Saxo Capital Markets in Singapore.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.5 percent to four-and-a-half month low, after losing more than 1.0 percent on Friday. Hong Kong's Hang Seng Index tumbled 2.1 percent to a five-month low.
Japan's Nikkei share average surrendered the 15,000-level and ended down 2.5 percent at a two-month low.
Expectations of continued stimulus withdrawal by the U.S. Federal Reserve added to the market's gloom.
Fed officials will begin their regular two-day policy meeting beginning on Tuesday, and are likely to remain unfazed by the rout in emerging markets.
"Everyone was reminded about last May's turmoil when investors unwound their positions in emerging markets on worries about Fed's tapering," said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities in Tokyo.
Data on capital flows suggests retail investors are mainly responsible for the current emerging markets rout, which could intensify if institutional investors join the capital flight.
Investors also continued to fret about the impact of tightening credit conditions in China as Beijing seeks to curb growth in high-risk lending.
The dollar slipped to as low as 101.77 yen early on Monday, its weakest since Dec. 6, though it had last stabilised at 102.44 yen, up about 0.2 percent.
The euro also fell to a seven-week low of 139.25 yen but also rebounded to edge up about 0.2 percent on the day to 140.20 yen.
The yield on benchmark 10-year Treasuries notes stood at 2.729 percent in Asian trade, after it fell as low as 2.706 percent on Friday, its lowest intraday level since Nov. 26.
In commodities trading, gold rallied for a third straight session on Monday to a fresh two-month high, after marking its fifth consecutive weekly gain. Spot gold inched up to $1,268.90 an ounce, after rising as high as $1,278.01.
U.S. crude futures were supported by the weaker dollar, trading nearly flat on the day at $96.68 a barrel, though concerns about China's slowdown weighed on the upside.
Copper on the London Metal Exchange edged up about 0.1 percent to $7,189.50 a tonne, after earlier sinking as low as $7,160, which was its lowest since Dec. 11.