SINGAPORE, Dec. 1 (MNI) - The U.S. dollar pulled back from its earlier highs against the yen in late Asian trade Tuesday after the Bank of Japan ended its emergency policy meeting with little fresh measures seen as likely to limit the Japanese currency's gains.

The U.S. currency was firmer against the yen this morning after the Bank of Japan called an unscheduled "emergency" meeting amid calls from government leaders to do more to help stop the economy from plunging into a deflationary spiral of price and wage cuts at a time when the country also faces a risk of a strong yen hurting exports.

The meeting fueled fears that any policy response could include a return to active intervention in the forex markets to limit the yen's gains, dealers said.

The U.S. dollar spiked through Y87.00 soon after the BOJ announcement was made, and it then went through layers of sell orders to hit a Y87.49 high before easing back a few points.

Soon after Japanese stock markets ended the day with a 2.91% gain at 9,572.2, the BOJ announced it would set up a new Y10 trillion fixed rate funding program to offer funding support for the banking system. The BOJ also opted to keep its benchmark rate on hold and said forex instability could have an adverse impact on the economy.

The U.S. dollar dipped quickly back to around Y86.70 after the BOJ decision was issued, with dealers noting there was no specific mention of intervention or a return to quantitative easing.

Still, analysts noted comments leading up to the meeting suggested some concern about the yen's recent moves.

"Rhetoric levels are sharply rising, which implies that current currency levels are proving very difficult for the economy," said analysts at UBS.

BOJ Governor Masaaki Shirakawa will hold a news conference to discuss decisions at the meeting at 1700 JST (0800 GMT) today, the BOJ said.

Euro-dollar meanwhile was trading at $1.5030 in late Asian trade Tuesday, near the top of the day's $1.4970 to $1.5041 range.

The pair was somewhat sidelined through much of the Asian day, and largely tracked the vagaries of euro-yen, which ended in Asia around Y130.60, after a Y129.35 to Y131.28 range today.

Elsewhere, the U.S. dollar was also modestly firmer against the Australian dollar after the Reserve Bank of Australia stuck to its guns and raised its benchmark cash rate by 25 basis points to 3.75% today despite some analysts saying it should stay on hold.

Most economists had correctly forecast the RBA decision, although some acknowledged there was a chance the RBA would delay the move until its next meeting in February 2010 to fully assess the fallout of Dubai's plan to delay debt repayments on financial markets globally.

Some economists had also begun to waver on their rate hike views following media commentary and Tuesday's uninspiring manufacturing industry data, which showed the sector barely growing and inventories dropping dramatically.

The Australian dollar ran into initial hurdles after the release of an index measuring activity in the manufacturing sector and data showing building approvals in October this morning.

The Australian currency slipped off an early $0.9185 high at the start of the Asian day but then settled between $0.9155 and $0.9175 as traders waited for the RBA.

Aussie-dollar dropped quickly to a session low of $0.9120 soon after the RBA statement, which also noted the rise in the exchange rate in 2009 would contain prices for traded goods and services in the period ahead, and would dampen growth in the trade-exposed sector of the economy.

"Statements that followed the decision were fairly neutral and as market had gotten long ahead of the decision, profit taking was only natural," commented one trader.

By the end of the day here, aussie-dollar was still trading just under $0.9160 compared with about $0.9164 before the RBA policy announcement.

"More risk aversion would see the risk of the aussie heading south after the pair slipped to lows of $0.8947 last Friday," noted United Overseas Bank analysts. "Good support sits at the $0.9000 figure."

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