* Japan's Y2.1 trln intervention pushes up forex reserves
* Gains in gold prices, euro vs dollar also contribute
* Record reserves highlight imbalances from intervention
By Kaori Kaneko
TOKYO, Oct 7 (Reuters) - Japan's foreign reserves surged to a record in September after the Ministry of Finance intervened by selling the yen for the first time in more than six years, drawing unwanted attention to imbalances created by currency intervention.
Policymakers are at odds over the global currency system and tension is mounting ahead of Group of Seven and International Monetary Fund meetings starting on Friday.
U.S. officials are pushing for China to allow the yuan to rise faster but China has so far resisted, saying currency appreciation would hurt its economy.
Brazil has warned of the risks of competitive currency devaluation, while France has been pushing for a new approach to managing currencies.
Japan's efforts to weaken its currency put it in an akward position because it also supports yuan appreciation.
The accumulation of dollar reserves could also contribute to capital flows that push up emerging market currencies because it depresses yields on Treasuries.
GLOBAL IMBALANCES
"I don't think it's a good idea for Japan to continue to intervene and pile up reserves," said Tohru Sasaki, head of Japan rates and foreign exchange research at JPMorgan Chase in Tokyo.
Sasaki said this was leading to certain imbalances that could be harmful for the global economy.
"I don't think Japan will be under strong criticism at the G7 meeting. But at the same time, other countries will argue that if Japan continues to intervene that could be a problem."
Japan's reserves rose to a record $1.1 trillion at the end of September, the Ministry of Finance said on Thursday.
Japan spent 2.1249 trillion yen ($25.61 billion) on yen-selling intervention in the month to Sept. 28, the ministry announced previously, as the strong yen against the dollar threatened to derail Japan's slowing economy and worsen deflation.
But those actions prompted only temporary gains in the dollar, which fell further against the yen to hit a fresh 15-year low on Wednesday. Market players have grown cautious that Japan may step into the market again.
The bulk of Japan's reserves are believed to be held in Treasuries.
Japan's foreign reserves also swelled as gains in gold prices inflated the value of the government's holdings, the ministry said. Gold was at $1,307 per ounce at the end of September, up from $1,246 at the end of August, it said.
Gains in the euro against the dollar pushed up the value of euro-denominated assets after they were converted into the dollar.
The euro was at $1.3635 at the end of September versus $1.2679 at the end of August.
In the face of growing evidence that the yen's strength was hurting the economy, the Bank of Japan on Tuesday carried out what Governor Masaaki Shirakawa described as "comprehensive monetary easing", pledging to pump more funds into the struggling economy and keep interest rates virtually at zero. ($1=82.93 Yen) (Additional reporting by Stanley White; Editing by Edmund Klamann)