* Fujii: aims to keep 2010/11 bond issuance below Y44 trln
* Balanced budget goal needed to ease market worry -analyst
* Natural to hold dollars in Japan's forex reserves -Fujii (Recasts headline, first paragraph)
By Tetsushi Kajimoto
TOKYO, Oct 27 (Reuters) - Japan's finance minister criticised the Bank of Japan's view of the economy as too rosy and narrowly informed, keeping pressure on the central bank before it reviews support for credit markets this week.
The BOJ, similar to central banks elsewhere, has come under pressure from some cabinet ministers who worry that a quick end to its emergency support measures would hurt an economy just emerging from its deepest recession in 60 years.
"The BOJ has repeatedly said the economy is getting better, but they are dealing with different people," Finance Minister Hirohisa Fujii told a meeting of the heads of regional branches of the ministry.
"I believe everyone here is examining the situation in a more down to earth way," he said.
The MOF's regional branches raised their view on the economy in their quarterly report for July-September, saying it showed some signs of a pick-up as output activity looked up although the situation remained severe.
But that assessment appeared a little grimmer than the BOJ's view that Japan's economy has started to pick up.
The Bank of Japan is leaning towards scrapping some corporate finance support programmes in December, sources with knowledge of the bank's thinking said last week, rebuffing government pressure to delay an exit from credit markets.
To fend off criticism that the move could hurt Japan's fragile economy, the BOJ will stress that it will keep interest rates near zero and continue funneling abundant cash to the market.
Government jawboning has been known to prompt the BOJ to act in the past in a contrary way just to demonstrate its independence.
DEBT PROBLEM
Fujii said Tokyo would consider the bond market carefully when planning its new debt issuance, adding that new JGBs for fiscal 2010/11 must stay below 44 trillion yen ($478 billion).
The benchmark 10-year Japanese government bond yield is hovering near a 2-½ month high partly on concerns about the amount of bonds the new Democratic Party-led government plans to issue to pay for its spending plans.
The government has repeatedly vowed to keep its debt issuance in the fiscal year starting next April below 44 trillion yen, the same as the amount planned in this year's budget, compiled by the former administration which was ousted in an Aug. 30 election.
"The issue of spending is important, but the condition of the bond markets is also important, so we're attaching the utmost importance to it," Fujii told a news conference.
But market players are not convinced such a course is possible, given a likely plunge in tax revenues as well as the government's plans for additional spending of about 7 trillion yen on policies such as child benefits and lower highway tolls.
Naomi Hasegawa, a senior fixed-income strategist at Mitsubishi UFJ Securities, said the government should set a fiscal reform target.
"The problem is that the government has not shown a goal of restoring fiscal health in the medium and long term. That has raised concerns among market players," she said.
"The government must present a balanced budget goal to keep its debt under control, rather than only pledging to keep new debt issuance below 44 trillion yen in the next fiscal year."
Fujii later said the dollar has been weak despite a U.S. desire for the U.S. currency to be strong.
Still, he said that has not changed Japan's policy of managing its $1 trillion foreign exchange reserves -- the world's second biggest after China's -- mainly with the dollar.
"The dollar is the strongest currency in the world, and Japan should hold strong currencies in its foreign exchange reserves as a matter of course," Fujii told a news conference.
"That may be supporting the dollar in a way."
Fujii said he would skip a meeting of finance chiefs from the Group of 20 major economies in Scotland next month due to an extraordinary session of parliament at home. Senior Vice Finance Minister Yoshihiko Noda will attend on his behalf. ($1=92.09 Yen) (Editing by Hugh Lawson)