GLOBAL MARKETS-Yen drops, Nikkei jumps on Japan FX intervention

                                
 * Worried by strong yen, Japan intervenes in FX market
                                
 * Yen falls over 2 pct, Nikkei index jumps nearly 3 percent
                                
 * Unclear if Japan has stomach for long intervention
campaign
                                
 * Health of global economic recovery still main focus
                                
 By Nick Macfie
                                
 SINGAPORE, Sept 15 (Reuters) - Japan intervened in foreign
exchange markets for the first time in six years on Wednesday
to stem economic damage from the surging yen, pushing its
currency sharply lower and lifting Tokyo stocks by almost 3
percent.
                                
 By early afternoon, the dollar was up more than 2 percent
at 85.00 yen <JPY=>, rebounding from a fresh 15-year low of
82.87 yen against the Japanese currency hit in early trade.
                                
 Finance Minister Yoshihiko Noda confirmed the intervention,
saying Tokyo was communicating with authorities overseas but
indicating that Japan had acted alone.
                                
 Market sources said it continued to intervene through the
morning, selling the yen to stem a rise that was threatening
the country's fragile economic recovery. [ID:nTOE68E02W]
                                
 The Nikkei <.N225> reversed early losses and surged 2.8
percent on word of the intervention. Shares of exporters, which
have been dogged by the yen's strong gains this year, were
among the biggest winners, with Sony Corp <6758.T> rising
nearly 4 percent.
                                
 "Japan's authorities have declared war in sending a signal
that they will not allow the dollar/yen to fall to 80 easily,"
said Lee Jin-woo, head of the research centre at NH Investment
& Futures in Seoul.
                                
 "It has become difficult for investors to make a one-way
bet on a stronger yen. I think dollar/yen may try to rise to
86, a 60-day moving average and where players have built up
large dollar-short positions."
                                
 Simon Flint, Nomura Securities' global head of foreign
exchange research based in Singapore, said Japan will be seen
as a special case.
                                
 "Obviously its economy has been in significant trouble for
a while, stocks have been depressed for some time, export
performance relative to the Asian peer group has been very
weak. To some degree there will be some sympathy in the rest of
the world for Japan's predicament."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
 For more stories on yen strength, intervention: [ID:nECONJP] 
 PDF on the yen's rise:           http://r.reuters.com/zuz33p 
 Graphic on yen strength:         http://r.reuters.com/puw56n 
 For more stories on Japanese politics:           [ID:nPOLJP] 
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
                                
 Prime Minister Naoto Kan's government has been trying to
talk down the yen in recent weeks but had stopped short of
intervening in the markets, apparently worried that acting
without Group of Seven partners would not be very effective.
                                
 Kan was re-elected ruling party leader on Tuesday,
decisively fending off a challenge from powerbroker Ichiro
Ozawa, an outspoken advocate of intervention.
                                
 But it was unclear whether Kan's government had the stomach
for a prolonged and expensive campaign similar to Japan's last
foray into foreign exchange markets in 2003-2004.
                                
 U.S. officials at the Federal Reserve and the Treasury
declined to comment immediately about Tokyo's action.
                                
 Stocks elsewhere in Asia struggled.
                                
 The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> rose 0.1 percent, focusing more on questions
surrounding the global economic recovery and held in check by a
lacklustre performance on Wall Street overnight. [.N]
                                
 COMMODITIES FALL
                                
 Spot gold <XAU=>, a traditional safe port of call amid
volatile currency and stock markets, fell $3 to $1,267.30 ounce
by midday after rising as high as $1,274.75 on Tuesday -- its
biggest one-day gain in four months as economic uncertainty
lured nervous investors into bullion.
                                
 Oil prices also fell after Enbridge Inc said repairs to a
key pipeline taking Canadian crude to the United States were
nearly complete and it hoped to gain approval to resume
shipments.
                                
 U.S. crude for October delivery <CLc1> was down 60 cents,
or 0.78 percent, at $76.20 per barrel.
                                
 U.S. share prices ended mostly lower on Tuesday. The Dow
Jones industrial average <.DJI> fell 0.2 percent, the Standard
& Poor's 500 Index <.SPX> lost 0.1 percent and the Nasdaq
Composite Index <.IXIC> rose 0.2 percent.
 (Additional reporting by Charlotte Cooper in Tokyo)
 (Editing by Kim Coghill)