BRUSSELS, Sept 15 (Reuters) - Too fast a rise of the yen could pose a threat to economic recovery, the European Commission said after Japan intervened to weaken its currency, but noted coordinated action would have been more effective.
"We note that the Bank of Japan has intervened in foreign exchange markets following the recent strong appreciation of the yen," Commission spokesman Amadeu Altafaj said. "We reaffirm that exchange rates should reflect economic fundamentals."
Japan sold yen in the market on Wednesday for the first time in six years and promised more to come in a bid to stop the currency's relentless rise from hurting exporters and threatening a fragile economic recovery.
Fresh after victory in a party leadership contest, Japan's Prime Minister Naoto Kan appeared to be stepping up efforts to wrench the country out of deflation by targeting yen strength, which has weighed on stock prices and corporate profits.
"Excess exchange rate volatility and exchange rates that are not in line with fundamentals may have adverse implications for economic and financial stability," Altafaj said.
"Despite Japan's ongoing current account surplus, a too rapid yen appreciation could pose challenges to the recovery," he said. "In this context, monetary policy measures are at least as likely to have an impact on the yen strength and on deflation as interventions in the currency market," he said.
Estimates varied on how much Japan has spent in its first intervention in the foreign exchange market since 2003-2004, when it forked out 35 trillion yen ($409 billion).
Dealers suggested Wednesday's intervention amounted to about 300-500 billion yen ($3.6-$6 billion), though some reports put it closer to 100 billion yen.
The U.S. dollar was boosted further after an official at Japan's Ministry of Finance said intervention was not finished. It climbed about 3 percent on the day to more than 85.50 yen, having dropped to a 15-year low of 82.87 yen earlier.
"We are of the opinion that coordinated interventions are to be preferred, as past experience has shown that these are notably more effective than uncoordinated interventions," Altafaj said.
(Reporting by Jan Strupczewski; Editing by Ruth Pitchford)