UPDATE 2-Japan's Fujii: never said FX intervention impossible

(For more stories on the Japanese economy, click [ID:nECONJP])

* Govt mulls steps to counter yen rise in stimulus package

* MOF's Tamaki may discuss currencies in Washington -NHK (Recasts, adds quotes, details)

TOKYO, Nov 30 (Reuters) - Japanese Finance Minister Hirohisa Fujii denied saying intervention in currency markets was impossible.

"That's a lie. I never said such a thing," Fujii told reporters on Monday, referring a media report that he had said so the previous day.

Japan's Mainichi newspaper had quoted Fujii as telling reporters on Sunday that intervention in currency markets "would not happen at this stage" and that now is a time to monitor markets.

The dollar was trading around 86.20 yen JPY= on Monday afternoon, up from a 14-year low of 84.82 yen hit on Friday. [FRX/]

The government is considering including measures how to deal with the recent surge in the yen in an economic stimulus package it plans to compile this week, weighing slightly on the yen.

Fujii raised the prospect of a Group of Seven joint statement on currencies on Friday to cool the yen's rally as the dollar tumbled to a 14-year low against the Japanese currency.

But he declined to comment on intervention, saying he was not in a position to use the word due to commitments with other G7 countries on currency flexibility.

Tokyo has not intervened since March 2004, the end of a 15-month long yen-selling spree totalling 35 trillion yen to stop a rising yen from hurting an export-driven economy.

Analysts say the market would grow warier of intervention risks if the dollar fell to 85.00 yen, 80.00 yen or its record low of 79.75 yen. [ID:nT353201]

Public broadcaster NHK said on Monday that Rintaro Tamaki, the Ministry of Finance's (MOF) top bureaucrat in charge of currencies, will discuss currency issues with U.S. Treasury officials this week.

Tamaki will attend a seminar hosted by the International Monetary Fund in Washington later on Monday.

"It is true that he will attend the IMF seminar on Monday evening, but we cannot say anything further," a MOF official told Reuters. (Reporting by Hideyuki Sano and Tetsushi Kajimoto; Editing by Michael Watson) ((hideyuki.sano@thomsonreuters.com; +81 3 6441 1827; Reuters Messaging: hideyuki.sano.reuters.com@reuters.net)) ((If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))