UPDATE 1-BOJ Nov minutes: Some said Europe woes affecting Japan mkts

* Share price falls, rising dollar costs cited

* Policymakers increasingly on alert for Europe fallout

* Some flag weakness in Japan economic data

By Rie Ishiguro

TOKYO, Dec 27 (Reuters) - Some Bank of Japan board members said Europe's sovereign debt woes were already affecting Japan's financial markets and warned their impact could increase, minutes of the bank's Nov. 15-16 meeting showed on Tuesday.

"Some members cited weakness in share prices and real estate investment trusts, the yen's rise and climbing dollar funding costs, saying that instability in global financial markets was affecting Japan's markets to some extent," the minutes showed.

The BOJ has maintained that Japan's financial markets as a whole remain stable despite escalating tension in the euro zone, with companies' borrowing costs on a gradual decline and their funding conditions continuing to improve.

But its policymakers have been increasingly alert to fallout from Europe coming through various channels, such as a slowdown in Japan's key Asian export markets and the yen's appreciation as investors seek so-called safe havens for their money.

The central bank has signalled its readiness to offer further monetary stimulus if risks to Japan's economic recovery increase.

With the board agreeing that global financial markets are likely to remain under strong pressure, some warned of the risk that this could hurt Japan's corporate capital spending and employment as some export-related companies have cut their profit forecasts, the minutes showed.

A few flagged weakness in some Japanese economic indicators released since the previous meeting and said they would carefully watch whether that weakness was temporary, according to the minutes.

At the meeting, the central bank kept monetary settings unchanged, having eased just three weeks earlier, while cutting its economic assessment.

Governor Masaaki Shirakawa had said that there were differences in opinion among some board members as to what extent Europe's debt problems were deepening.

The minutes show that a few members said that downside risks to the economy had likely increased somewhat since the previous meeting.

EMERGENCY MEET

At a subsequent regular meeting last week, the BOJ stood pat on policy but offered a still bleaker view of the economy, acknowledging that growth will stagnate at least until spring next year.

When the BOJ convened an emergency meeting on Nov. 30 to sign off an accord among the world's top central banks to cut the cost of dollar funding to mitigate the impact of the euro zone's debt woes, members agreed that global markets are likely to remain under pressure for a protracted period.

A few said reduced costs of dollar liquidity operations were likely to ease the stigma associated with tapping central bank auctions but by how much was highly uncertain, the minutes of the meeting showed.

The BOJ's dollar funding operations have since drawn strong bids before the crucial year-end period as market strains intensify in Europe and borrowing costs for countries such as Italy and Spain jump towards unsustainable levels.