The yen hit a six-month high against the dollar yesterday as prospects faded of the Bank of Japan intervening unilaterally in the market to halt the currency's rise.

But analysts warned that if the yen rose much further it could provoke co-ordinated action by the US and Japanese authorities to prevent a rapid appreciation snuffing out Japan's fragile economic recovery.

During London trading hours yesterday the yen rose more than 2 per cent to Y111.66 against the dollar, its highest level since early February, before settling back to close at Y112.1. It also set a high of Y117.64 against the euro.

Economists said that if the dollar fell below Y110 the US authorities might be persuaded to intervene jointly with the Japanese to limit the yen's rise.

The yen's appreciation came after comments this week by Masaru Hayami, the governor of the Bank of Japan. Mr Hayami warned Japanese companies they would need to deal with currency volatility themselves rather than rely on the authorities to smooth fluctuations.

"Hayami's comments led the markets to believe the Bank of Japan is stepping away from direct intervention," said Steve Hannah, chief economist at the Japanese bank IBJ International in London. This gave speculative buyers an excuse to push the yen higher, he said.

Mr Paul Chertkow, head of global currency research at Bank of Tokyo-Mitsubishi in London, said that the yen had also been subjected to upward pressure against the euro as Japanese companies took Mr Hayami at his word and hedged their overseas earnings, buying yen to protect the domestic value of profits received abroad.

"Many Japanese corporations did not feel the need to hedge while the euro was above Y120," he said. "But once it broke down through that level this week, they have been selling euros and buying yen."

Japanese share prices, which have been rising since economic growth in the first quarter of the year was unexpectedly revised up last week, also contributed to the yen's rise by attracting foreign capital.

The Bank of Japan conducted an aggressive campaign of intervention in June and July to stop the yen rising but it has not been seen in the currency markets for nearly a month. Analysts said the bank might have decided that intervening on its own was ineffectual. It could be hoping to persuade the US Federal Reserve and possibly the European Central Bank to act with it, they said.