The Bank of Japan checked exchange rates with banks in the foreign exchange market on Thursday as Prime Minister Naoto Kan and other policymakers stepped up their rhetoric over a steep rise in the yen.

Finance Minister Yoshihiko Noda will hold a news conference at 4:30 a.m. ET, the ministry said. It did not give a reason for the news conference.

Market sources said the BOJ asked banks for dollar/yen exchange rates saying it wanted to do a trade, a step beyond its usual contact.

But the central bank did not conduct any transactions, they said, and many traders said intervention was unlikely for now.

When they check, I suppose they want to send the signal out that they are watching more closely than normal, said Tony Morriss, a currency strategist at ANZ in Sydney.

That's a different matter from when they intervene which is when they try to either slow an advance or when they see markets moving into an overshoot. It doesn't look like we are that stage yet.

Indeed, a euro zone official said on Wednesday that European authorities would not welcome Japanese intervention and joint intervention by major central banks was not on the cards.

The BOJ checked rates in a similar manner when the yen surged in late November, just before it held an emergency board meeting and decided to launch a fixed-rate fund supply operation that market players say was aimed at curbing the yen's rise.

Whether Japan will intervene depends on how much global shares and U.S. bond yields will fall. But if the dollar falls to around 82-83 yen, the chance of intervention will rise, said Masafumi Yamamoto, chief FX strategist at Barclays Capital.

The dollar hit a 15-year low of 84.72 yen on trading platform EBS on Wednesday.

On Thursday it was steadier but suddenly rose to around 85.40 yen from 85.10 after the BOJ checked rates and after Kan was quoted describing yen gains as rough.

POLICYMAKERS STEP UP WARNING

Behind policymakers' rhetoric is concern that a stronger yen could threaten Japan's exporters and derail a feeble recovery from the global crisis.

Kan decried the sudden yen rise as rough, Jiji news agency, reported, while Japan's currency tsar said he had discussed financial markets with a central bank official.

Rintaro Tamaki, the finance ministry's top foreign exchange official, said he had discussed the financial markets' situation with a Bank of Japan official in charge of international affairs.

Asked if he had discussed currencies, Tamaki said: I exchanged opinions with Executive Director (Hiroshi) Nakaso on financial markets in and outside of Japan.

We only talked about the markets as we are not in charge of monetary policy, Tamaki told reporters at the finance ministry.

Japan's authorities haven't intervened since March 2004, when a 15-month long yen selling spree came to an end.

During that period, they sold 35 trillion yen to try to stop a rising yen from harming all-important exports and to fight deflation.

Even a rare G7 statement between meetings in October 2008, which singled out yen volatility and was seen as giving Japan approval to intervene, did not tempt Tokyo to step in.

Keisuke Tsumura, a parliamentary secretary at the Cabinet Office, told reporters the yen's strength poses a risk to Japan's economy and rapid rises in the currency could call for some measures. [ID:nTKG006821]

(Additional reporting by Tokyo bureau, Koh Guiqing in Sydney; Writing by Kazunori Takada; Editing by Neil Fullick)

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