BOJ's Iwata says markets have not yet calmed down

KOCHI, Japan, Feb 7 (Reuters) - Bank of Japan Deputy Governor Kazumasa Iwata said on Thursday that world financial markets have yet to return to normal after the turmoil that broke out in the middle of last year.

"The biggest uncertainty the world economy is facing is that the turmoil in international financial markets has not calmed down," Iwata said in a speech to business leaders in Kochi, western Japan.

But he said the Japanese economy is likely to keep growing in the fiscal year starting in April as the effects of temporary factors such as falling housing investment peter out.

Iwata was the lone dissenter in the central bank's previous rate hike last February and is seen as a policy dove. (Reporting by Hideyuki Sano)