* Stocks, Asian currencies rebound as Turkey lifts rates sharply
* Aggressive action stirs hopes of stabilisation in emerging markets
* Safe-haven assets dip, while commodity currencies regain ground
* Optimism will face test as Fed is expected to trim bond buys
LONDON, Jan 29 (Reuters) - Turkey's lira saw its biggest jump in five years on Wednesday after the central bank stunned investors with a huge rate hike designed to staunch and reverse a major flight from risk.
The move boosted investors' hope that a vicious cycle of selling in emerging markets in general may have been short-circuited.
With the U.S. Federal Reserve expected to press on with cutting backs its huge stimulus later, and South Africa's central bank, another of the countries caught up in recent developing market storm, also meeting, a hectic 24 hours may be in store.
European shares rode the wave of optimism sparked by Turkey as they opened, with Britain's FTSE 100, Germany's DAX and France's CAC 40 all climbing a second day running, with the gains of around 0.9 - 1.0 percent.
Turkey followed India by tightening policy at a midnight meeting of its central bank, with a far larger than expected hike of 425 basis points taking the overnight lending rate all the way to 12 percent.
Early signs were that it was stemming the rout in the Turkish lira, which surged by the most in five years to reach 2.1650 per dollar from Monday's historic low of 2.39. Turnover was exceptionally strong, while Istanbul's stock market also jumped 2 percent.
"The broad market reaction has been surprisingly positive and when you see U.S., European and Asian markets all reacting positively to little old Turkey, you think that maybe this has a chance," said ICAP market strategist Chris Clark.
Later in the session, the improved mood will face a test from the Fed, which is widely expected to trim its asset buying programme by another $10 billion a month at the conclusion of its two-day policy meeting.
Such trimming is a major factor in the recent emerging market sell-off because much of the Fed's largesse has flowed to higher-yielding assets to be found in such places.
"The Fed has claimed numerous times that they are setting monetary policy based only on the U.S. economy, so volatility elsewhere is not going to sway their decision for now," said Luke Bartholomew, fixed income strategist at Aberdeen Asset Management in London.
Euro zone periphery government bonds benefitted from the risk rally in early deals and the calmer tone was also reflected in the market's favoured measure of volatility, the VIX index, which dropped more than 9 percent on Tuesday.
The relief was enough to lift MSCI's emerging equity index 1.3 percent, Japan's Nikkei 2.7 percent and S&P 500 e-mini futures 0.5 percent, while traditional safe havens such as the yen, bonds and gold all eased.
Currencies leveraged to commodity prices and global economic growth benefited from the better mood. Also helping was surprising strength in industrial production in South Korea - an antidote to recent softness in China data.
The Australian dollar rose more than a third of a U.S. cent to $0.8825 in the wake of the news from Turkey. The Aussie is often used as a proxy for hedging against stress in less liquid emerging markets.
Currencies from Malaysia to Indonesia and India all gained, while the South Korean won boasted its biggest daily rise in four months.
Going the other way, the safe-haven yen gave up some of its recent gains as the dollar advanced about 0.4 percent on the day to 103.25 yen from a seven-week trough of 101.71 touched at the start of the week.
In commodity markets, gold lapsed to $1,251 an ounce to be well off Monday's high of $1,278.01.