TOKYO -- The dollar edged down against the yen in Tokyo on Friday as fears over intervention eased after comments by Finance Minister Masajuro Shiokawa suggesting action is not imminent ahead of the G8 meeting next week, dealers said.

The U.S. unit traded at 123.24-26 yen at 5:00 P.M.

(0800 GMT) Friday, down slightly from 123.33-37 yen in New York and 123.80-82 yen in Tokyo late Thursday.

The dollar was also helped by the euro's rise against the yen rise on expectations European markets are less vulnerable to a global economic downturn than Japan, as well as comments by Japanese officials welcoming the euro's rise, told AFP.

Against the yen, the euro was quoted at 119.10, up from 118.94 in New York and 118.60 in Tokyo Thursday afternoon.

Shiokawa said the Finance Ministry would closely watch currency movements after the recent rise in the yen but warned excessive government involvement in the market would cause international friction.

"If any country tries to take action to improve its currency position, relative to other nations, it will cause international friction and hurt the rules of the free economy," Shiokawa said.

Prime Minister Junichiro Koizumi is due meet the other leaders of the G8 countries for a summit in Canada next week as his government faces criticism from U.S. manufacturers for intervening in the market to prop up the dollar against the yen.

The finance minister's remarks caused the dollar to drop back after the us currency benefited from early fears of possible Bank of Japan intervention, said Kenneth Landon, senior currency strategist at Deutsche Bank.

"That had an effect. It did sell off. Also people are noting that the euro/yen is above 119 so that may take some pressure off the dollar/yen," he said.

But investors remained cautious about possible further intervention by the Bank of Japan to curb the yen's gains, dealers said.

The euro looks to gain the most from the dollar woes, as Japan's financial markets are being hit by worries over the global economy.

The euro bought 0.9661-63 dollars around 5:00 P.M., compared with 0.9656-60 dollars in New York and 0.9578-80 dollars in Tokyo Thursday afternoon.

Deputy Finance Minister for International Affairs Haruhiko Kuroda said the euro's strength was viewed positively by Japan.

"We welcome the euro's strengthening against the dollar, as it has so far been undervalued, but for the yen this is not the case.

There is no reason for the yen to be stronger against the dollar," he said.

DBS Bank in Singapore said the strength of the euro would soothe market fears of an imminent rate hike by the European Central Bank (ECB).

"To a certain extent, the euro's recent sustained rally does somewhat reduce the probability, given that a stronger euro goes a long way to reduce external pricing pressures.

"Together with anaemic global equities, a strong euro should keep ECB at bay till September." In late Singapore trade, the dollar was higher at 50.22 Philippine pesos from 50.17 on Thursday, 8,610 Indonesian rupiah from 8,590, and 42.049 Thai baht from 42.025.

The Greenback was down at 33.855 Taiwan dollars from 34.026, 1.7728 Singapore dollars from 1.7832 and 1,219.9 South Korean won from 1,224.5.