SYDNEY (Reuters) - Asian markets rallied in relief on Tuesday after China reported its economy had not slowed as far as many had feared, a rare glint of brightness amid gloom over the global outlook.

The Australian dollar rose on the news even as its U.S. counterpart gained broadly, while shares in Shanghai recouped some of Monday's steep losses.

Beijing reported the world's second largest economy grew 7.3 per cent in the fourth quarter of last year, fractionally above forecasts of 7.2 per cent and steady on the third quarter. Figures on December retail sales and industrial production also beat estimates.

The news helped soothe investors skittish after the major Chinese share indices tumbled on Monday when regulators cracked down on speculative lending.

The Shanghai Composite Index bounced 1.8 per cent while the CSI300 index added 1.1 per cent.

Markets were higher across most of the region led by a 1.5 per cent gain in the Nikkei as the yen slipped and the Bank of Japan began a two-day policy meeting that should see it reaffirm its massive bond-buying campaign.

MSCI's broadest index of Asia-Pacific shares outside Japan edged up 0.3 per cent, while South Korea's main index rose 0.8 per cent.