Yen extends slide after rally in US shares

TOKYO, Aug 23 (Reuters) The yen extended a slide against the dollar and higher-yielding currencies on Thursday as gains in U.S. equities soothed worries of further risk aversion and unwinding of carry trades.

The Bank of Japan is widely expected to keep interest rates steady at 0.50 percent at its two-day policy meeting ending on Thursday, and the focus will be on remarks by BOJ Governor Toshihiko Fukui at a news conference afterwards.

The yen could gain support if Fukui says anything that points to the possibility of a rate rise in the coming months, although the impact would likely prove fleeting, traders said.

''The focus is more on equities than the BOJ and on the Dow more than the Nikkei,'' said a trader at a Japanese bank.

''If equities stabilise it becomes easier to build risky positions,'' he said.

The dollar rose to 115.81 yen up from around 115.30 yen in late U.S. trading on Wednesday.

The euro rose to 156.85 yen compared to around 156.20 yen in late New York.

Higher-yielding currencies climbed against the low-yielding yen, with the New Zealand dollar rising 0.79 percent to 82.01 yen Dollar/yen and cross/yen extended gains after S&P 500 index futures jumped after the U.S. stock market close on Wednesday.

The jump in U.S. equities futures was triggered by news that Bank of America Corp would invest TOKYO, Aug 23 (Reuters) The yen extended a slide against the dollar and higher-yielding currencies on Thursday as gains in U.S. equities soothed worries of further risk aversion and unwinding of carry trades.

The Bank of Japan is widely expected to keep interest rates steady at 0.50 percent at its two-day policy meeting ending on Thursday, and the focus will be on remarks by BOJ Governor Toshihiko Fukui at a news conference afterwards.

The yen could gain support if Fukui says anything that points to the possibility of a rate rise in the coming months, although the impact would likely prove fleeting, traders said.

''The focus is more on equities than the BOJ and on the Dow more than the Nikkei,'' said a trader at a Japanese bank.

''If equities stabilise it becomes easier to build risky positions,'' he said.

The dollar rose to 115.81 yen up from around 115.30 yen in late U.S. trading on Wednesday.

The euro rose to 156.85 yen compared to around 156.20 yen in late New York.

Higher-yielding currencies climbed against the low-yielding yen, with the New Zealand dollar rising 0.79 percent to 82.01 yen Dollar/yen and cross/yen extended gains after S&P 500 index futures jumped after the U.S. stock market close on Wednesday.

The jump in U.S. equities futures was triggered by news that Bank of America Corp would invest $2 billion in Countrywide Financial Corp The Dow Jones industrial average and the Standard&Poor's 500 Index both rose more than 1 percent on Wednesday.

The euro gained support after the European Central Bank reminded markets on Wednesday of its Aug. 2 monetary policy stance, a move that some analysts saw as signalling its intention to raise rates in September despite market turbulence.

The statement came as part of a surprise announcement that the ECB would auction 40 billion euros in three-month financing to money markets on Thursday, on top of regular funds.

REUTERS CS BST0528 billion in Countrywide Financial Corp The Dow Jones industrial average and the Standard&Poor's 500 Index both rose more than 1 percent on Wednesday.

The euro gained support after the European Central Bank reminded markets on Wednesday of its Aug. 2 monetary policy stance, a move that some analysts saw as signalling its intention to raise rates in September despite market turbulence.

The statement came as part of a surprise announcement that the ECB would auction 40 billion euros in three-month financing to money markets on Thursday, on top of regular funds.

REUTERS CS BST0528