TOKYO (Reuters) – Japan intervened in global currency markets yesterday to sell yen for the first time in six years in a bid to stop its relentless rise from threatening a fragile economic recovery.

Fresh after victory in a party leadership contest, Japanese 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.

Kan told reporters that yesterday's intervention had some effect but the government was watching foreign exchange moves with a sense of urgency.

A Japanese monetary source told Reuters that Japan continued to intervene in the currency market during New York trading hours, and traders at major foreign exchange dealers estimated Wednesday's efforts amounted to around $20 billion.

Even as the dollar surged three percent on the day against the yen, doubts about the ultimate effectiveness of Japan's unilateral yen selling spree abounded.

A 15-month solo effort by Switzerland did little to tame the Swiss franc, and European Union officials said co-ordinated action always proves more effective.

Aside from apparently acting alone, Japan faces the stiff task of trying to put a halt to yen strength while other major central banks such as the US Federal Reserve may take more steps to ease policy that could weigh on their currencies.

"It is far less clear that intervention will be effective in a world of zero interest rates and excess liquidity, but we think that it still makes sense for Japan to take action to try to arrest yen strength," said Richard Jerram, chief Asia economist at Macquarie Securities in Tokyo.

The dollar rose to 85.72 yen from its 15-year low beneath 83 yen, its biggest daily gain in nearly two years. It was last up 3.1 percent at 85.60 yen.

The Japanese currency's rise has brought it closer to its record peak of 79.75 per dollar set in 1995 and has weighed on the Tokyo stock market's Nikkei average, which climbed 2.3 percent on news of the intervention.

Finance Minister Yoshihiko Noda, who will reportedly keep his post after a cabinet reshuffle, indicated Tokyo acted alone.

Noda said he was in contact with authorities overseas, and analysts expected Japan to be spared international criticism.

But a European Union source said Japan had not even informed the Europeans, or the United States, about the intervention.

Billionaire financier George Soros said Japan was right to act to bring down the value of the yen.

"Certainly, they are hurting because the currency is too strong so I think they are right to intervene," Soros said at a Reuters Newsmaker event.