UPDATE 1-Japan PM says govt shouldn't comment on forex

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

* PM Hatoyama says stable forex desirable

* PM: Kan was talking about how business felt on yen (Adds more comments)

By Leika Kihara

TOKYO, Jan 8 (Reuters) - Japanese Prime Minister Yukio Hatoyama said on Friday the government should not comment on foreign exchange rates, in an apparent rebuke to his new finance minister, who said he wanted the yen to weaken more.

Finance Minister Naoto Kan called on Thursday for a weaker yen and said he would work with the Bank of Japan to achieve an appropriate exchange rate level, prompting a sharp slide in the currency against the dollar. [ID:nTOE60607E]

"In currencies stability is desirable. Rapid fluctuations are undesirable," Hatoyama told reporters.

When asked about Kan's remarks, Hatoyama said: "I think he was talking in terms of how the business community felt."

The yen JPY= fell nearly 1 percent to around 93.30 per dollar on Thursday as Kan's remarks reinforced expectations that he would be more inclined to act against excessive yen rises.

The yen stood around 93.30 to the dollar on Friday.

Kan, 63, formerly National Strategy Minister, was named finance minister on Wednesday, replacing 77-year-old Hirohisa Fujii, who stepped down for health reasons. [ID:nTOE60601A]

Japan's key exports industry is slowly helping the world's second-largest economy emerge from its worst post-war recession, so a weaker yen would help. Major exporters, including Honda Motor Co (7267.T), have complained about the high level of the yen. (Editing by Hugh Lawson)