A string of upbeat production and investment data, a rally in Tokyo share prices and encouraging sounds from officials unleashed speculation about potential growth surprises and maybe even another Bank of Japan rate hike before year-end.

"All the signs are that not only will the second quarter beat expectations, but the second half (of 2000) will as well," said James Malcolm, an economist at JP Morgan.

This emerging view helped the yen hold near six-week highs at 106.90 yen toward the mid-session, although an early attempt to push further was frustrated by recurring rumours of a possible downgrade in Japan's credit rating. Finance minister Kiichi Miyazawa also put yen bulls on warning that the ministry was watching the markets closely.