Japanese Prime Minister Yoshihiko Noda said on Friday he strongly hoped the Bank of Japan would continue to act boldly to beat deflation, keeping up pressure for further monetary stimulus to support a fragile economic recovery.

BOJ Governor Masaaki Shirakawa said the central bank will continue to pursue policy to overcome deflation but warned against expecting too much from the bank, saying it was already buying government bonds aggressively and that the effect of its monetary easing would take time to appear on the economy.

Monetary stimulus and measures to boost Japan's growth potential are both important to beat deflation. We will continue our monetary easing, but monetary easing alone cannot (end deflation), Shirakawa told a parliament committee meeting.

Shirakawa also said it was inappropriate for the BOJ to adopt a policy similar to the Federal Reserve's Operation Twist, under which the U.S. central bank rebalances its portfolio with longer-dated securities.

Noda, appearing at the same parliament meeting, welcomed the BOJ's monetary easing in February and its decision in March to boost a loan scheme to encourage banks to fund prospective growth industries.

The BOJ acted boldly, sharing the same view (of the need to beat deflation) with the government, Noda said. I strongly hope the BOJ continues to take appropriate action as needed.

The BOJ surprised markets last month by boosting its asset buying programme and setting an inflation goal of 1 percent in the face of political pressure, signalling a more aggressive monetary policy to pull the economy out of deflation.

The central bank has signalled its readiness to act again if risks to Japan's economy heighten. But it is hesitant of boosting purchases of long-term government bonds too much, arguing that in a country saddled with huge public debt like Japan, doing so could trigger a spike in bond yields if markets interpret the move as monetising debt.

Some politicians, however, want the BOJ to buy bonds more aggressively and expand its balance sheet to bolster an ailing economy.

Shirakawa said the BOJ was already buying government bonds at a rapid pace. He also countered calls in parliament for the BOJ to adopt a Fed-style Operation Twist, arguing that doing so in Japan could push up short-term interest rates as it would involve selling short-term debt while buying long-term ones.

Japan on Thursday reported its first trade surplus in five months, and a revival of confidence among manufacturers has added to evidence the economy was growing again as the yen weakens and external demand picks up, reducing the need for further monetary policy easing.

Progress has been frustratingly slow in rebuilding areas of the northeast coast devastated by last year's massive earthquake and tsunami. But there are signs of recovery in the area and the broader economy, albeit uneven.

(Reporting by Leika Kihara; Editing by Edwina Gibbs & Kim Coghill)