UPDATE 1-Japan Azumi: won't rule out any measures vs yen rises

* Yen hovers a near 12-yr high vs euro, 7-week high vs dlr

* Strong yen threatens Japan's recovery from 2011 disaster

* Finmin says ready to act decisively on yen when necessary

* Govt to extend dollar grant scheme to fight strong yen

By Tetsushi Kajimoto

TOKYO, July 24 (Reuters) - Japanese Finance Minister Jun Azumi said on Tuesday he would not rule out any measures against excessive yen gains, repeating his readiness to intervene in the market to stem the currency's strength if it damages the export-reliant economy.

Fears that Spain may seek a full sovereign bailout sent the euro to a near 12-year low against the yen on Monday while risk aversion pushed the dollar to a seven-week low versus the safe-haven Japanese currency.

Azumi told a news conference after a cabinet meeting that the yen's recent one-sided movements clearly do not reflect economic fundamentals and that he was watching currency movements with a greater sense of caution.

"We will not rule out any measures against excessive movements, and we will act decisively when necessary," he said.

The dollar traded around 78.30 yen on Tuesday after touching a seven-week low of 77.95 yen. The euro stood at around 94.95 yen, close to 94.22 yen seen the previous day, a level unseen since late 2000.

Japan's economy is seen outperforming developed peers this year on firm domestic demand, but authorities worry that a strong yen could dampen the recovery prospects as it would make Japanese exports more expensive abroad and hurt company profits.

Japan spent a record 8 trillion yen ($102 billion) in unilateral intervention in the currency market Oct. 31 2011, when the dollar hit a record low of 75.31 yen, and another 1 trillion yen in November on undeclared forays into the market.

The Nikkei business daily said the Japanese government plans to extend its programme offering to help Japanese companies invest overseas as part of its effort to fight a firmer yen.

The paper said the dollar loan programme would be extended by six months or one year from its original Sept 30 deadline.

The government also expects the scheme, which can deploy up to 10 trillion yen, to help curb the yen's appreciation as Japanese companies' overseas investments boost dollar demand.

The government may allow other financial institutions such as the Development Bank of Japan to join the government-affiliated Japan Bank for International Cooperation (JBIC) in managing the programme, the Nikkei said.

Currently, JBIC obtains dollars at low rates from the government's foreign exchange fund special account to offer them to companies with overseas expansion plans.

Japanese authorities have stayed out of the market since the November interventions but resumed firing verbal salvoes recently on concerns that renewed rises in the yen threaten the economy's recovery from last year's earthquake and tsunami.

The G7 intervened jointly in March 2011 to counter a rapid yen rise just days after the nation was struck by the March 2011 disaster. But after that rare act of solidarity, Japan has struggled to win the group's understanding for its solo action to curb the yen's climb stemming from the euro zone debt crisis.

The International Monetary Fund has recently softened its tone on Japanese yen-selling intervention, saying the yen is moderately overvalued and that intervention could be tolerated in some cases as long as Japan consults with other countries.