* Yen falls after BOJ announces new funding operations
* BOJ's Shirakawa: Low rates will have long-term yen impact
* Dollar down on risk demand, Aussie up after RBA rate rise
(Releads, adds comment, updates throughout)
By Naomi Tajitsu
LONDON, Dec 1 (Reuters) - The yen fell broadly on Tuesday after the Bank of Japan announced more measures to ease monetary policy to help the ailing economy following an emergency meeting, while holding interest rates at 0.1 percent.
Despite its gains against the yen, the dollar fell against other major currencies as risk appetite improved after more clarity about the debt situation in Dubai eased some concerns about the region's stability.
The yen was down broadly on the day, but pared losses as the BOJ's decision to provide three-month funds at rock-bottom rates had surprised some in the market who had been expecting more aggressive action to stimulate the nation's economy.
Addressing recent strength in the yen, which shot to a 14-year high against the dollar last week, BOJ Governor Masaaki Shirakawa said the central bank's commitment to keeping rates low would have an effect on currencies in the long run.
He added the yen's rise and sluggish stock prices had led to Tuesday's introduction of the new operation. [ID:nTKU105715]
"The message is that the BOJ isn't completely indifferent to currency rates, and this should at least be marginally yen- negative," said Adam Cole, global head of currency strategy at RBC in London, while acknowledging the yen's initial reaction to the comments had been limited.
"But today's announcement should have little material impact on monetary policy."
Shirakawa spoke to reporters after the BOJ introduced a new operation to provide 10 trillion yen in three-month funds at a fixed rate of 0.1 percent in a bid to enhance monetary easing by trying to bring down longer-term rates. [ID:nTKZ006325].
Despite Shirakawa's comments, analysts said there was little standing in the way of more yen strength against the dollar so long as U.S. interest rates also remain essentially at zero.
By 0915 GMT, the dollar
The dollar has suffered against the yen in past months, pushing it as low as 84.82 yen late last week, a level not seen since mid-1995, as dollar interbank borrowing costs have fallen below yen ones this year.
The euro
The euro
The dollar index <.DXY> fell nearly half a percent to 74.550, while European share prices <.FTEU3> rallied 2 percent.
MORE DOLLAR/YEN WEAKNESS?
The Australian dollar
The currency reversed an earlier slide during choppy trade.
Australia's central bank lifted its key cash rates by 25 basis points to 3.75 percent, saying three hikes in a row was a material adjustment that would help sustain economic growth. [ID:nSYD117816]
Analysts anticipated more dollar/yen weakness after markets had been wrong-footed on expectations for bolder policy steps on Tuesday such as expanding BOJ purchases of government bonds to depress yields and help ease deflationary pressures.
"It seem the BOJ aimed to ease the yen's rise by depressing short-term rates to fix the rate gap between three-month rates between the yen and the dollar," said Tetsuya Inoue, chief researcher at Nomura Research Institute in Tokyo.
"But this was all they offered and came short of expectations. It was inevitable the market was sold on disappointment."
The BOJ has been under increasing political pressure to help avert recession, but Tuesday's decision is seen as a way to avoid a return to the BOJ's narrow form of quantitative easing, under which it slashed rates to zero and flooded markets with cash in 2001-2006. (Additional reporting by Tokyo Forex Team, editing by Stephen Nisbet) ((naomi.tajitsu@reuters.com; +44 207 542 5830; Reuters Messaging: naomi.tajitsu.reuters.com@reuters.net))