HIGHLIGHTS-Key quotes from Japan policymakers on yen, economy

TOKYO, July 13 (Reuters) - Japanese Finance Minister
Yoshihiko Noda issued a fresh warning on Wednesday against the
yen's rise to a four-month high, saying recent moves in the
currency had been one-sided.

Bank of Japan Governor Masaaki Shirakawa also warned that
the yen's rise would hurt the economy in the short term and
stressed the bank's readiness to act on monetary policy when
needed.

Below are key quotes from policy-makers on Wednesday:

FINANCE MINISTER YOSHIHIKO NODA

In response to reporters asking about yen rises:

"I think the movement has been a little one-sided and I will
closely watch markets today as well."

Asked if Tokyo will intervene in the market: "I can't
comment on intervention."

In parliament, on whether BOJ should monetise debt:

"It's common sense in the global community that central
banks should not directly underwrite government debt."

ECONOMICS MINISTER KAORU YOSANO, in news conference:

"As a member of the cabinet I really shouldn't comment on
currencies, and it is up to markets to determine levels.
However, I will say that volatile and rough moves are
undesirable ...

"The yen isn't rising because of domestic factors. The
European debt crisis has led to selling of European assets, and
as a result the yen is being chosen as a safe haven."

BOJ GOVERNOR MASAAKI SHIRAKAWA, in parliament:

On the yen's rise:

"Europe's debt problem has emerged as a risk to the global
economy, making it harder for investors to take on risk. Japan
is also faced with big problems ... But investors tend to choose
currencies in which to invest in relative terms.

"A yen rise has a big impact on Japan's economy in the short
term. Longer term, it may have some positive effect. But in the
short run it puts downward pressure on the economy."

On monetary policy, deflation:

"When looking at the fundamental reason behind Japan's
deflation, there need to be efforts to bolster the Japanese
economy's ability to grow. This can't be achieved by the BOJ
alone.

"The BOJ, the government and the private sector all need to
make sustained efforts to pull Japan out of deflation ... The
BOJ will do its utmost for this purpose.

"When interest rates are zero, the cost of holding currency
would be zero regardless of how much money central banks supply
to the economy ... In a zero interest rate environment, it's
therefore hard for prices to rise."

On calls for the BOJ to underwrite government debt:

"The underwriting of debt by the BOJ would not immediately
trigger inflation. But if markets perceive the move as debt
monetisation it would heighten uncertainty over the outlook and
lead to a rise in government bond yields."

On risks from Japan's fiscal problems:

"Lacking clarity on how to ensure Japan's fiscal balance in
the future would have a negative effect on household and
business spending."

BOJ BOARD MEMBER KOJI ISHIDA, in parliament:

"Markets assume that central banks do not underwrite
government debt. If the BOJ were to underwrite debt it would
give the impression that markets are unable to absorb bonds and
could trigger a sovereign rating downgrade by rating agencies
... That would destabilise financial markets that are currently
stable, so it should be avoided.

"I believe job growth is needed for Japan to pull out of
deflation. Demand needs to be created sufficient for companies
to invest more. Otherwise, the economy as a whole won't grow."

BOJ BOARD MEMBER SAYURI SHIRAI, in parliament:

"Based on past experience, it's undesirable for central
banks of major economies to underwrite government debt. I know
Japan is faced with difficulties. But that is why it's important
to ensure market trust (in Japan's ability to manage its
finances)."

(Reporting by Leika Kihara; Editing by Michael Watson)