SINGAPORE, Jan 5 (Reuters) - Interbank dollar lending rates hovered near four-year lows in Asia on Monday amid expectations that central banks would continue to ease policy to contain damages from the global financial crisis.

India's central bank on Friday slashed short-term interest rates by 100 basis points and tried to attract foreign funds into the country to spur economic growth. [ID:nBOM129188]

The U.S. Federal Reserve's move to cut its target rate close to zero on Dec. 16 had created plenty of room for Asian central banks to cut interest rates further, analysts say.

A deputy governor at the People's Bank of China (PBOC) said the rate cuts in the United States and Japan gave the central bank room to adjust monetary policy further if it needed to.

"We have further room in leveraging and orchestrating monetary policy tools," deputy PBOC governor Yi Gang and Zhang Fan of Peking University wrote in the Caijing magazine. [ID:nPEK350418]

China has cut interest rates five times since mid-September and flooded the market with liquidity to reflate the economy.

* Rates on three-month dollar funds in Singapore SIUSDD=ABSG edged up to 1.4183 percent from 1.4175 percent on Friday but still hovered at their lowest levels since mid 2004.

* Overnight dollar rates eased to 0.122 percent from 0.137 percent on Friday.

* Two-year dollar swap spreads USD2YTS=RR SMKR99 were quoted at 77.25, widening from 69.75 basis points on Friday but still holding near their tightest levels since early 2008.