UPDATE 2-Japan says won't rule out more FX action; confirms stealth intervention

* Tokyo will act in fx market when needed -Azumi
* Tokyo sold Y1 trln in stealth intervention Nov -MOF
* BOJ Shirakawa signals monetary conditions already loose

By Tetsushi Kajimoto and Kaori Kaneko
TOKYO, Feb 7 (Reuters) - Japan followed up its record
yen-selling intervention last year with covert operations and
the finance minister said it is ready to step in again to
counter speculative moves, repeating his strong warning to
markets against pushing up the yen too much.
The yen crept up near its record high against the dollar hit
last October, when Japan last intervened, raising concern among
policymakers that renewed yen gains may derail Japan's fragile
economic recovery from the damage wrought by last year's
earthquake and tsunami.
Finance Minister Jun Azumi said on Tuesday Japan will not
rule out any steps to battle speculative moves, repeating his
verbal warning of action on hope it will at least keep traders
wary of testing the yen's upside for now.
"If speculative moves become evident and market moves
deviate from economic fundamentals, and speculators distort
markets in their self interest, I'll take any steps if necessary
in order to protect Japan's national interest," Azumi said.
"As I said back then (when Japan last intervened), I would
not rule out any measures," he told reporters.
Data released by the finance ministry the same day confirmed
earlier estimates that Tokyo spent roughly 1 trillion yen ($13
billion) in early November on undeclared forays into the
currency market.
The covert action was conducted for four days after the
hefty 8 trillion yen unilateral intervention on Oct. 31, to make
sure its impact would not fade quickly.
The data also showed Tokyo only bought dollars, not euros.
"Azumi underlined the fact that the ministry's stance
remains unchanged on intervention, which is that it will act
when necessary despite criticism from Europe and the United
States of Japan's past solo intervention," said Masafumi
Yamamoto, chief currency strategist at Barclays Bank in Tokyo
and a former central bank official.
"If the yen's ascent towards these levels become too rapid,
that would prompt authorities to intervene as companies cannot
keep up with rapid currency moves," he said.

BOJ ALSO UNDER PRESSURE
Many market players believe Japanese may intervene again
should the dollar fall well below the record low of 75.31 yen,
as exporters struggle with a combination of a slowing global
economy and currency strength.
The U.S. currency traded at around 76.60 yen on Tuesday
.
Japanese electronics makers have reported huge losses with
Panasonic forecasting loss of $10 billion in the
financial year to March.
But some analysts think Tokyo is more wary of selling the
yen heavily after the U.S. Treasury in December chided Japan for
its unilateral interventions.
"It's uncertain whether Tokyo will intervene again given
criticism from the United States," said Kengo Suzuki, currency
strategist at Mizuho Securities.
The yen's renewed strength has also heightened pressure on
the Bank of Japan to ease monetary policy further, although the
central bank is unwilling to loosen credit immediately.
BOJ Governor Masaaki Shirakawa told parliament the central
bank will continue to do its utmost to pull Japan out of
deflation, describing the economy as in a severe state.
But he added that the central bank was already supplying
ample funds. The BOJ is expected to stand pat on monetary policy
at its next rate review on Feb. 13-14 unless Europe's sovereign
debt crisis triggers a severe market turmoil or the yen hits new
records.
In intervening on Oct. 31, Japanese authorities said they
needed to act against speculative market moves and that they
would continue to act until they were satisfied.
The dollar has stayed above the record low since then but
crept near that level last month after the U.S. Federal Reserve
pledged to keep interest rates low until late 2014.