HONG KONG/SINGAPORE, Aug 17 (Reuters) - Asia Pacific policy chiefs and central bankers urged calm on Friday as credit market turbulence and investors' fears of worse to come triggered further falls in the region's stock markets.

In testimony to lawmakers, Reserve Bank of Australia (RBA) Governor Glenn Stevens said that while the turmoil in financial markets had to be watched, he doubted it would hurt the Australian economy.

"A lot of people are very uncertain and are behaving in a way which I think in the past few days we've seen bordering on the irrational," he said.

The RBA intervened in foreign exchange markets to halt a slide in the Australian dollar and provided extra cash to the domestic financial system.

"We're seeing some signs of stabilisation. The central banks have been stepping into the market, providing comfort," said Chua Hak Bin, an economist at Citigroup in Singapore.

"I wouldn't say it's all over. People are still nervous ... The main concern ultimately is that the woes will spill over to U.S. consumer spending. If that happens it could be quite drawn out."

The Philippine and Malaysian central banks were also suspected of intervening again on Friday to stem losses in their currencies, which have been caught up in the unrelenting sales of riskier assets.

Japan's new top financial diplomat, Naoyuki Shinohara, in his first public comment since taking up the job last month, stuck to the finance ministry's standard line on currencies as the yen surged towards a 14-month peak against the dollar, saying only that it was watching markets carefully.

A senior Bank of Korea official said South Korea's financial markets had seen no shortage in the supply of foreign currency and that the won's sharp fall on Thursday appeared to be a natural correction.

WEEK OF TURMOIL

Friday marked one week since Asia Pacific central banks first joined a global campaign by monetary authorities to calm panicky credit markets by pouring liquidity into banking systems.

Since then Asian stocks excluding Japan have fallen more than 10 percent, their biggest weekly decline since January 1998.

The latest central bank comments did little to calm fears among either equity or debt investors.

While some financial stocks in Asia rebounded on Friday, the region's major stock markets fell further, with Japan's Nikkei average falling 5.4 percent -- its biggest percentage drop since Sept. 12, 2001 -- to its lowest close in a year.

"We are still in a defensive mood. Spreads are still below the highs and recovery is still some way off," said Desmond Soon, a bond fund manager with Pacific Asset Management.

"It is important to see what the authorities will do at this stage ... Left on its own, it's quite difficult for the market to recover."

Heightened risk aversion was highlighted by the yen's move towards a 14-month peak against the dollar and a nine-month high against the euro.

The yen has rallied on the unwinding of carry trades, in which the low-interest-rate Japanese currency has been used by speculators as a cheap source of funds to buy higher-yielding and often riskier assets in other currencies.

This included the Australian dollar, which slid 0.6 percent to $0.7885, and the New Zealand dollar, which fell 2 percent to $0.6818, although that was up from an eight-month low of $0.6715 hit on Thursday.

The Philippine peso hit a low of 46.90 per dollar last seen in the middle of May, taking its losses in the past four weeks to nearly 5 percent.

A trader in Kuala Lumpur said Malaysia's central bank had intervened through state-run banks, selling dollars as the ringgit approached a seven-month low of 3.5190 per dollar.

In contrast, Thai Finance Minister Chalongphob Sussangkarn said the government was satisfied with the current level of the baht, which has weakened against the dollar.

While market watchers were keeping a close eye on the region's policymakers and central banks, analysts said their counterparts elsewhere were more likely to set the market direction.

"Investors are taking their lead primarily from the U.S. Fed and the ECB (European Central Bank) and to some extent the BOJ (Bank of Japan) and to a lesser extent Australia," said Mark Konyn, chief executive for Asia Pacific of Allianz's RCM asset management unit.

"Central banks in this region are watching very carefully."

(With additional reporting by Umesh Desai in Hong Kong)