GLOBAL MARKETS-Dollar, US yields fall on Fed easing view

                                
 * Dollar below 85 yen; dealers on Japan intervention watch
                                
 * Government bond yields fall, Fed seen buying debt soon
                                
 * Gold near a record high hit on Tuesday
                                
 By Kevin Plumberg
                                
 HONG KONG, Sept 22 (Reuters) - The U.S. dollar and Treasury
yields fell on Wednesday in the wake of the Federal Reserve's
move closer to buying more bonds to support the economy, a
prospect that kept gold near record highs.
                                
 The Fed left interest rates near zero after a policy
meeting on Tuesday, though said inflation was running below
where it would like to be and the central bank was ready to add
more stimulus.
                                
 "We continue to expect that a sizable asset purchase
program will be implemented in coming months," economists at
Goldman Sachs said in a note. [ID:nN20109053]
                                
 "This will most likely cumulate to at least $1 trillion,
possibly quite a bit more, and will probably be focused in
purchases of Treasury securities."
                                
 The falling dollar pushed up the yen and kept traders on
high alert for signs that Japan was intervening in markets to
drag its currency back down.
                                
 Japanese Prime Minister Naoto Kan said intervention in the
foreign exchange markets would be "unavoidable" if there was a
drastic change in the currency. He also told the Financial
Times in an interview that Tokyo planned a "total" package of
measures that would boost domestic demand and help to weaken
the currency.
                                
 Japanese equities slipped because investors were selling
shares of exporters they had bought last week after Japan
knocked the yen lower, but additional cash in circulation
resulting from policy changes could end up being supportive of
stocks.
                                
 * The dollar fell 0.3 percent against the yen to 84.82 yen
<JPY=>, below where traders had thought Japan's central bank
would support it. The euro rose to $1.3310 <EUR=>, the highest
since August 6.
                                
 * The 10-year U.S. Treasury future was up 0.2 percent
<TYv1> while in the cash market the benchmark 10-year yield
slipped 2 basis points compared with late on Tuesday in New
York to 2.56 percent <US10YT=RR>.
                                
 * The Fed's statement increased expectations the Bank of
Japan could take action as well to ease policy further, pushing
up Japanese government bonds. The 10-year JGB future was up
0.32 point <2JGBv1> in early trade.
                                
 * Japan's Nikkei share average <.N225> was down 0.44
percent, with electronics parts maker TDK Corp <6762.T> the
biggest drag on the index.
                                
 * Equity trading volumes could be light on Wednesday with
markets shuttered in China, South Korea and Taiwan because of
public holidays.
                                
 * Gold in the spot market was up 0.1 percent to $1,287.75
per ounce <XAU=>, near an all-time high of $1,290.70 reached on
Tuesday. The precious metal has been driven by speculation that
with advanced economies still more likely essentially to print
money, inflation may not be too far off.
 (Editing by Tomasz Janowski)