* Brent up as much as $2.29 to $116.22 US crude tops $103

  * Fear of disruption boost prices 1.5pct as West bombs Libya

  * Output increases won't ease oil price pressure, Iran says

  * Coming Up: U.S. existing home sales for Feb 1400 GMT (Adds second wave of air strikes in Libya)

  By Alejandro Barbajosa

  SINGAPORE, March 21 (Reuters) - Brent climbed 1.5 percent on Monday towards $116 after western forces launched a military campaign against Libya, stoking fears that violence will intensify in North Africa and the Middle East, source of more than a third of the world's oil.

  Unrest over the weekend also flared in Syria and Yemen in the wake of popular uprisings that toppled long-time leaders in Tunisia and Egypt earlier this year and a crackdown on protests in Bahrain last week.

  U.N.-backed strikes led by the U.S., the U.K. and France raised the stakes in a civil war that has cut Libya's oil output to less than a quarter of the previous 1.6 million barrels per day (bpd), nearly paralysing shipments abroad from what used to be the world's 12-th largest crude exporter.

  Brent crude for May rose as much as $2.29 to $116.22 a barrel and was up 1.5 percent at $115.69 by 0343 GMT, about $4 from last month's 2-1/2-year high near $120.

  U.S. crude for April advanced $1.79 to $102.86 after western powers launched a second wave of air strikes on Libya early on Monday, dismissing a ceasefire announced by the country's military late on Sunday.

  " With involvement from the West, the uncertainty that has surrounded the region and the fear of upheaval and unrest spreading to countries like Saudi Arabia, where we could lose a lot more crude that what we did Libya, is definitely going to be the main price driver," said Matthew Lewis, an analyst at CMC Markets in Sydney.

  President Barack Obama ordered U.S. forces into the biggest military intervention in the Arab world since the 2003 invasion of Iraq, while Libyan leader Muammar Gaddafi vowed to fight to the death.

  " At this stage, it looks like Libya has further to play. Gaddafi still seems very defiant. We'll see further spikes and shocks in the oil market this week," Lewis said.

  Military action on Libyan air defenses over the past two days, sanctioned by the United Nations in a Security Council resolution on Thursday, has crippled Gaddafi's capability to launch airstrikes and detect foreign aircraft, a senior U.S. military official said on Sunday.

  But Gaddafi's control of oil infrastructure in the long term would probably mean reshaping deals with foreign oil companies in favour of countries not participating in the attacks.

  Libya is considering offering oil block contracts directly to China, India and other nations it sees as friends, Libya's top oil official said on Saturday, instead of opening bidding processes.

  China, India, Russia, Brazil and Germany were the five nations that abstained in last week's U.N. vote to authorise the use of force against Gaddafi. The other ten members of the Security Council voted in favour.

  The weekend's military intervention hit a diplomatic setback as the Arab League chief condemned the " bombardment of civilians" .

  The strikes began on Saturday, as a coalition of western nations vowed to prevent Gaddafi from launching attacks on civilians as he seeks to crush a rebellion against his four-decade rule.

 

  MIDEAST PREMIUM

  Crowds set fire to a headquarters of the ruling Baath Party in the Syrian city of Deraa on Sunday, while Yemeni President Ali Abdullah Saleh fired his government after a string of allies broke ranks with him as he faces increasing pressure from street protests to step down.

  Saudi Arabia and other countries from the Gulf Cooperation Council (GCC) last week sent troops into Bahrain to help quell Shi'ite protests there against the Sunni monarchy. That angered Iran, which denounced the foreign intervention in the island state that lies less than 100 kilometres from the hub of the Saudi oil industry.

  " The key is really how Saudi (Arabia) and Iran play out. Cool heads need to prevail. It's contained at the moment but if things worsen, you see a Mideast premium very quickly," said Jonathan Barratt, managing director of Commodity Broking Services.

  Iran's oil minister said on Saturday said any output increase by individual OPEC members aimed at reducing oil price pressures caused by the Libyan crisis would not have the desired effect.

  Some OPEC countries, including Saudi Arabia, have already increased production partly to compensate for the drop in Libyan output and to prevent prices from reaching levels that could derail the global economic recovery. But that has also eroded the group's spare capacity to offset further disruptions.

  " None of the OPEC countries have considered it (the current oil price) damaging" to the world economy, Nigerian oil minister Allison-Madueke said on Sunday.

  Oil prices have now recovered completely from a slump triggered by Japan's strongest earthquake on record on March 11.

  Japan hoped power lines restored to its stricken nuclear plant may help solve the world's worst atomic crisis in 25 years, triggered by the earthquake and a tsunami that also left more than 21,000 people dead or missing.

  Likely to limit oil's gains was Friday's increase in China's rate reserve requirements as the nation stays focused on stifling inflation, traders and analysts said. (With additional reporting by Cho Mee-Young in SEOUL and Nick Trevethan in SINGAPORE Editing by Manash Goswami)

* Investors take wait-and-see attitude on PBOC's next step

  * But China unlikely to change long-term yuan rise strategy

  * Yuan at 6.5659, up about 4 pct since depegging in June 2010

  By Chen Yixin and Jacqueline Wong

  SHANGHAI, March 21 (Reuters) - The yuan rose versus the dollar on Monday after the People's Bank of China fixed a record high mid-point, signalling its intentions to use the yuan as another inflation-fighting tool following an unexpected increase in banks' reserve requirement ratios last Friday.

  The 50 basis point rise in RRR after markets had closed on Friday was the third such increase this year and the sixth since November.

  But spot yuan traded in a small range around the mid-point, with investors preferring to take a wait-and-see stance to monitor the central bank's next policy step.

  " Another quiet day again," said a dealer at a Chinese commercial bank in Shanghai. " We cannot be very sure about the central bank's next step, so we still focus on the dollar's move and clients demand for now."

  " But in the long term, the yuan still has room to rise because of high domestic inflation and overseas pressure."

  The dollar index was at 75.6 by midday, after hitting a 15-month low on Friday.

  The yuan was trading at 6.5659 versus the dollar by midday, up from Friday's close of 6.5691. The currency has now risen around 4 percent since it was depegged in June 2010.

  Before trading began, the PBOC fixed the yuan's mid-point at a record high of 6.5632 to the dollar, stronger than Friday's 6.5668.

  China appears to be using the yuan's exchange rate to fight high inflation and help adjust an economic structure heavily reliant on exports, promoting widespread expectations that the currency will appreciate at a much faster pace than last year's 3.6 percent rise.

  The PBOC uses the fixing, from which dollar/yuan can rise or fall 0.5 percent each day, to express the government's intentions for the Chinese currency.

  Benchmark one-year dollar/yuan non-deliverable forwards (NDF) were bid at 6.4400 by midday on Friday, little changed from 6.4410 at Friday's close. Their implied yuan appreciation in a year's time was at 1.90 percent.

* IRS, money market rates up on RRR increase

  * RRR rise has not reversed liquidity conditions

  * No strong expectation of imminent interest rate rise

  * Liquidity to loosen, further RRR eyed

  By Langi Chiang and Jason Subler

  BEIJING/SHANGHAI, March 21 (Reuters) - Chinese interest rate swaps and money market rates rose on Monday after the central bank unexpectedly raised banks' required reserve ratio (RRR) last Friday.

  The latest increase in required reserves, the third so far this year, will lock up roughly 350 billion yuan ($53.3 billion) at the central bank that could otherwise have been lent out.

  Investors had been anticipating further monetary tightening steps after the annual session of parliament, which ended March 14, including potentially this year's second benchmark interest rate rise.

  However, such expectations had eased recently after the earthquake, tsunami and nuclear crisis in Japan, leading to excessive falls in IRS and money market rates in the past week.

  " In that sense, the tightening is less than previously expected," said a trader at a state-owned bank in Beijing.

  He said there was no fundamental change in liquidity conditions as the central bank had ended punitive reserve ratio rises for some banks before raising the industry-wide RRR.

  The benchmark five-year IRS, which had plunged 76 basis points over the past month, was up 17 basis points at 4.04 percent at midday, and may find a floor at around 4 percent, traders said.

  However, that did not imply any heightened expectations of interest rate rises, as reflected by the fact that the yield on the benchmark five-year government bond remained unchanged at 3.52 percent.

  " Of course, further interest rate increases cannot be ruled out, considering inflationary pressure in the first half," said the trader.

  " But there are no strong expectations now. Some are actually saying that we are near the end of this round of interest rate rises," he said.

  FURTHER TIGHTENING?

  The People's Bank of China (PBOC) has drained net funds through bills and bond repurchase agreements in each of the last two weeks, which was part of the reason behind the hope that Beijing may not turn to harsher tools, including RRR rises.

  " Open market operations are a must, but can only fine-tune liquidity," said Shi Lei, a senior analyst with Ping'an Securities in Beijing.

  Close to 750 billion yuan in central bank bills are set to mature by the end of April, putting extra pressure on China to find ways to drain liquidity.

  That, together with rising foreign exchange reserves and a possible rebound in bank loans in April, will probably prompt the central bank to raise the reserve ratio again in around a month, Shi said.

  On Monday, the weighted average seven-day bond repurchase rate, the main barometer of short-term liquidity supply, moved up to 2.9727 percent at midday from Friday's close of 2.0245 percent.

  It is expected to edge up further in the run-up to banks' actual payment of the required reserves on Friday, then ease back again, traders said.

* KOSPI climbs as foreign buying continues

  * POSCO up after reports Buffett continues to favour shares

  * Nuclear power issues rally, transporters bounce

  By Jungyoun Park

  SEOUL, March 21 (Reuters) - Seoul shares rose on Monday with Japan's nuclear crisis seen abating, but gains were limited as investors remained wary amid military action against Libya.

  The market has recovered losses made since the Japan quake and tsunami as fears of a nuclear crisis in Japan have eased, according to Chung Seung-jae, a market analyst at Mirae Asset Securities.

  The Korea Composite Stock Price Index < .KS11> (KOSPI) was up 0.94 percent at 1,999.79 points as of 0242 GMT, hovering near the psychologically significant 2,000 point level and above the close of 1,981.58 points on March 10, a day before the quake hit Japan.

  Japan hoped power lines restored to its stricken nuclear plant may help solve the world's worst atomic crisis in 23 years, triggered by an earthquake and tsunami that also left more than 21,000 people dead or missing. [ID:nL3E7EK08V]

  " Foreign buying momentum is still weak. The ongoing Libya situation is keeping investors on edge," Chung added.

  Foreign investors were buyers of a net 22.6 billion won ($20.09 million) worth of stocks, poised to pick up shares for a fourth consecutive session.

  Western powers pressed ahead on Sunday with a campaign of air attacks on Libya, promising more strikes despite criticism by the Arab League.[ID:nLDE72J009]

  Nuclear power related issues bounced robustly following their recent sharp falls.

  Shares in KEPCO Engineering & Construction < 052690.KS> rose 12 percent after tumbling 23 percent in the past five sessions. Shares in KEPCO Plant Service & Engineering < 051600.KS> jumped 14.1 percent, after declining 13.5 percent during the previous five sessions.

  Transporters and tour agency issues also recovered, with Korean Air Line < 003490.KS> rising 4 percent and Asiana Airlines < 020560.KS> advancing 6.1 percent.

  Hana Tour < 039130.KQ> rose 2.5 percent and Modetour < 080160.KQ> climbed 3.2 percent.

  Shares in POSCO < 005490.KS> outperformed, rising 1.4 percent after billionaire investor Warren Buffett, whose Berkshire Hathaway < BRKa.N> holds a stake in the firm, was quoted by local media as saying on a visit to South Korea that he continues to like the steelmaker.

  Daewoo Shipbuilding & Marine Engineering < 042660.KS> rose 3.3 percent and Woori Investment & Securities < 005940.KS> climbed 1.7 percent.

  But insurers slipped, with shares in Samsung Life < 032830.KS> down 1.4 percent and Korea Life < 088350.KS> losing 1.7 percent.

  (Reporting by Jungyoun Park Editing by Jonathan Hopfner)

By Kazunori Takada and Junko Fujita

  TOKYO (Reuters) - Engineers restored electricity to three reactors at a crippled Japanese nuclear power plant and hope to test water pumps at the quake-damaged facility soon, the first clear signs of progress in tackling the world's worst atomic crisis in 25 years.

  Japan suffered an estimated $250 billion (£154.2 billion) in damage from the earthquake and tsunami on March 11 that left more than 21,000 people dead or missing, while radiation leaks from the Fukushima nuclear plant have caused global alarm.

  U.S. Energy Secretary Steven Chu, asked by CNN whether the worst of Japan's 10-day nuclear crisis was over, said: " Well, we believe so, but I don't want to make a blanket statement."

  Japanese authorities said the Iodine 131 density at the plant was about six times the standard for workers, which meant they needed to wear masks, but U.S. Nuclear Regulatory Commission Chairman Gregory Jaczko said radiation levels there appeared to be falling.

  But new problems have emerged, especially from contaminated food and water.

  Japan's health ministry urged some residents near the plant in Fukushima prefecture to stop drinking tap water after high levels of radioactive iodine were detected, Kyodo news agency said on Monday.

  Cases of contaminated vegetables and milk have already stoked anxiety despite assurances from Japanese officials that the levels are not dangerous. The plant lies 240 km (150 miles) north of Tokyo.

  The government prohibited the sale of raw milk from Fukushima prefecture and spinach from another nearby area and might announce more restrictions on food on Monday.

  " The contamination of food and water is a concern," said Gerhard Proehl of the Vienna-based U.N. watchdog the International Atomic Energy Agency (IAEA).

  In a much-needed boost for Japan's battered stock market, billionaire investor Warren Buffett said the earthquake and tsunami were an " enormous blow" but should not prompt selling of Japanese shares. Instead, he called the events a " buying opportunity" .

  Buffett was speaking to reporters during a visit to South Korea on Monday.

  Japan's crisis spooked markets last week, prompted rare intervention by the G7 group of rich nations to stabilise the yen, and fuelled concerns the world economy may suffer because of disrupted supplies to the auto and technology industries.

  Tokyo's markets are closed for a holiday on Monday. The Nikkei index shed 10 percent last week, wiping $350 billion off market capitalisation.

  NO POWER YET TO REACTORS 1,3 AND 4

  At Fukushima, 300 engineers have worked around the clock inside an evacuation zone to contain the worst nuclear accident since Chernobyl, Ukraine, in 1986.

  They have been spraying the coastal complex with thousands of tonnes of sea water so fuel rods will not overheat and emit more radiation. Hopes for a more permanent solution depend on electricity cables reactivating on-site water pumps at each of the six reactors.

  " There have been some positive developments in the last 24 hours but overall the situation remains very serious," said Graham Andrew, a senior official of the IAEA.

  Working in suits sealed by duct tape, engineers have connected power cables to the No. 2, 5 and 6 reactors and plan to start testing systems soon, officials say. Officials earlier said a cable had been connected to reactor No.1 but engineers on Monday said this was not yet the case.

  The most badly damaged reactors are No. 3 and 4, which were both hit by explosions last week.

  If the pumps cannot restart, drastic and lengthy measures may be needed like burying the plant in sand and concrete.

  Some expatriates, tourists and local residents have fled Tokyo over radiation fears. Those who remain are subdued but not panicked.

  " There's no way I can check if those radioactive particles are in my tap water or the food I eat, so there isn't much I can really do about it," said Setsuko Kuroi, an 87-year-old woman shopping in a supermarket with a white gauze mask over her face.

  AID TRICKLE

  Easing Japan's gloom briefly, local TV on Sunday showed one moving survival tale: an 80-year-old woman and her 16-year-old grandson rescued from their damaged home after nine days.

  Official tolls of dead and missing are rising steadily -- to 8,450 and 12,931 respectively.

  The death toll could jump dramatically since police said they believed more than 15,000 people had been killed in Miyagi prefecture, one of four that took the brunt of the tsunami.

  Scores of nations have pledged aid to victims, but little foreign relief supplies are visible in some devastated towns and villages.

  " All we have had is the clothes on our backs. But they are good enough. They've kept us warm through all of this," said Machiko Kawahata as she, her daughter and granddaughter looked for clothes at a drop-off point in Kamaishi, a coastal town.

  " We will make do and we will make it through this."

  The 9.0-magnitude quake and ensuing 10-metre (32-ft) tsunami made more than 350,000 people homeless. Food, water, medicine and fuel are short in some parts, and near-freezing temperatures during Japan's winter are not helping.

  While Japanese have been focussed on the rescue operation rather than recriminations, media and others have raised questions over the government and plant operator Tokyo Electric Power Company's (TEPCO) performance.

  There have been suggestions the nuclear drama was taking priority over the human suffering, and that the early response of some officials was slow and opaque.

  TEPCO head Masataka Shimizu apologised at the weekend for " causing such trouble" at the plant but has not visited the site or made a public appearance in a week.

  (Additional reporting by Paul Eckert in Tokyo, Yoko Kubota and Chang-ran Kim in Rikuzentakata, Jon Herskovitz and Chisa Fujioka in Kamaisha, Michael Shields and Fredrik Dahl in Vienna Writing by Andrew Cawthorne and Jason Szep Editing by Dean Yates and John Chalmers)

By David Morgan and Caren Bohan

  WASHINGTON (Reuters) - Top U.S. officials on Sunday stressed the limits of American military involvement in Libya, despite a heavy assault on Muammar Gaddafi's forces, and said Libyans would decide their country's fate themselves.

  White House National Security Adviser Tom Donilon said Libyan leader Gaddafi had " lost legitimacy" and was isolated but the focus of military action was on protecting Libyan civilians, not ousting the veteran ruler from power.

  Defence Secretary Robert Gates, speaking as he flew to Russia, said the U.S. will not have a " pre-eminent role" in the coalition that will maintain a no-fly zone over Libya, and expected to turn over " primary responsibility" for the mission to others within days.

  Britain or France could take charge of the air operation, or NATO could lead, if sensitivities among the Arab League over working under the Western alliance leadership were assuaged.

  Gates spoke amid growing concern among U.S. politicians over the scope and nature of the Libya mission and after an acknowledgement from the top U.S. military officer that the assault on Gaddafi's forces could lead to an impasse.

  But Donilon, who spoke to reporters while travelling with U.S. President Barack Obama in Brazil, said Washington and its allies had " a very good first day" in the Libya mission.

  The United States says the U.N.-endorsed intervention is aimed at forcing Gaddafi's troops into a cease-fire and ending attacks on civilians who launched an uprising last month.

  Obama has called in recent weeks for Gaddafi to step down but U.S. officials have emphasised that is not the goal of the United Nations authorized attacks on Libya. The United States is eager to avoid similarities to the 2003 invasion of Iraq and ouster of President Saddam Hussein.

  Forces loyal to Gaddafi, who has ruled Libya for 41 years, had been taking back large swathes of territory from rebels until the air attacks, which may give the rebels the chance to regroup. Military analysts say it is unclear if they can.

  " I think this is basically going to have to be resolved by the Libyans themselves," said Gates. " Whether or not there is additional outside help for the rebels remains to be seen."

  Admiral Mike Mullen, chairman of the U.S. military's Joint Chiefs of Staff, told the CBS program " Face the Nation" the air mission in the North African country has a clear, limited scope.

  STALEMATE POSSIBLE

  But Mullen said the outcome of military action in Libya was " very uncertain." Asked if it could end in a stalemate with Gaddafi, Mullen replied: " I don't think that's for me to answer. Certainly, I recognise that's a possibility."

  Gates said the United States wanted Libya to remain a unified country, saying partition into a rebel-held east and Gaddafi-controlled west " would be a real formula for enduring instability."

  The aerial assault by U.S., French and British planes has halted an advance by Gaddafi's armoured units on the rebel-held city of Benghazi and attacks on air defences and radar sites have allowed the ad-hoc Western coalition to establish " a consistent and persistent" air presence over Libya, enforcing a no-fly zone, a U.S. official said.

  Vice Admiral Bill Gortney, director of the U.S. military's Joint Staff, told reporters there had been no new Libyan air activity or radar emissions and had been a significant decrease in Libyan air surveillance since strikes began Saturday.

  Benghazi was not yet free from threat, said Gortney, but Gaddafi's forces in the area were in distress and " suffering from isolation and confusion" after the air assaults.

  A Libyan army spokesman declared a fresh cease-fire earlier on Sunday but the United States and Britain said they did not believe Gaddafi was honouring it and said they would continue to enforce the no-fly zone.

  PRESSING FOR CLARITY

  Senior Republicans pressed U.S. President Barack Obama to give a clear rationale for the Libya mission, reflecting concern that U.S. forces could get bogged down in a long-running, costly operation that lacks defined goals.

  " The administration has a responsibility to define for the American people, the Congress and our troops, what the mission in Libya is," House of Representatives Speaker John Boehner, the top Republican in Congress, said in a statement.

  " I am concerned that the use of military force in the absence of clear political objectives for our country risks entrenching the United States in a humanitarian mission whose scope and duration are not known," added Republican Representative Howard McKeon, chairman of the House Armed Services Committee.

  The United States is now fighting in three conflicts -- Iraq, Afghanistan and Libya -- while struggling under a huge budget deficit and national debt. The Pentagon also has plans to cut $78 billion in Defence spending over five years.

  (Additional reporting by Phil Stewart, Alister Bull, Mark Hosenball, Missy Ryan and Vicki Allen Writing by Alistair Bell and Sean Maguire editing by Todd Eastham)

* Brent up as much as $2.26 to $116.19 US crude tops $103

  * Supply concerns mount as western forces attack Libya

  * Output hikes won't ease oil price pressure, Iran says

  * Coming Up: U.S. existing home sales for Feb 1400 GMT (Adds broker comment, China tightening measures)

  By Alejandro Barbajosa

  SINGAPORE, March 21 (Reuters) - Oil jumped by more than $2 on Monday, sending Brent to $116 after western forces launched a military campaign against Libya, raising the stakes in a civil war that has nearly paralysed crude exports from the north African nation.

  Brent crude for May rose as much as $2.26 to $116.19 a barrel and was up almost 1.7 percent at $115.82 by 0026 GMT. U.S. crude for April rose as much as $2.12 to $103.19 and was up $1.93 at $103.

  President Barack Obama has ordered U.S. forces into the biggest military intervention in the Arab world since the 2003 invasion of Iraq, while Libyan leader Muammar Gaddafi vowed to fight to the death.

  Unrest over the weekend also flared in Syria and Yemen in the wake of popular uprisings that toppled long-time leaders in Tunisia and Egypt earlier this year. A crackdown on protests in Bahrain last week also had oil traders on edge.

  " I can see uncertainty and fear driving the price of oil higher in the short term," said Matthew Lewis, an analyst at CMC Markets in Sydney.

  " At this stage, it looks like Libya has further to play. Gaddafi still seems very defiant. We'll see further spikes and shocks in the oil market this week."

  Military action on Libyan air defenses over the past two days, sanctioned by the United Nations in a Security Council resolution on Thursday, has crippled Gaddafi's capability to launch airstrikes and detect foreign aircraft, a senior U.S. military official said on Sunday.

 

  Still, the military intervention hit a diplomatic setback as the Arab League chief condemned the " bombardment of civilians" .

  The strikes began on Saturday, as a coalition of western nations vowed to prevent Gaddafi from launching attacks on civilians as he seeks to crush an uprising against his four-decade rule.

 

  FEAR OF UPHEAVAL

  " With involvement from the West, the uncertainty that has surrounded the region and the fear of upheaval and unrest spreading to countries like Saudi Arabia, where we could loose a lot more crude that what we did Libya, is definitely going to be the main price driver," Lewis said.

  Crowds set fire to a headquarters of the ruling Baath Party in the Syrian city of Deraa on Sunday, residents said, as the wave of unrest in the Arab world shook even one of its most authoritarian states.

  Yemeni President Ali Abdullah Saleh fired his government on Sunday after a string of allies broke ranks with him as he faces increasing pressure from street protests to step down.

  Saudi Arabia and other countries from the Gulf Cooperation Council (GCC) last week sent troops into Bahrain to help quell Shi'ite protests there against the Sunni monarchy. That angered Iran, which denounced the foreign intervention in the island state that lies less than 100 kilometres from the hub of the Saudi oil industry.

  " The key is really how Saudi (Arabia) and Iran play out. Cool heads need to prevail. It's contained at the moment but if things worsen, you see a Mideast premium very quickly," said Jonathan Barratt, managing director of Commodity Broking Services.

  Iran's oil minister said on Saturday said any output increase by individual OPEC members aimed at reducing oil price pressures caused by the Libyan crisis would not have the desired effect. Libya was pumping 1.6 million barrels per day (bpd) before the rebellion started last month.

  Oil prices have now recovered completely from a slump triggered by Japan's strongest earthquake on record on March 11.

  Japan hoped power lines restored to its stricken nuclear plant may help solve the world's worst atomic crisis in 25 years, triggered by the earthquake and a tsunami that also left more than 21,000 people dead or missing.

  Likely to limit oil's gains was Friday's increase in China's rate reserve requirements as the nation stays focused on stifling inflation. (With additional reporting by Cho Mee-Young in SEOUL and Nick Trevethan in SINGAPORE Editing by Manash Goswami)