The dollar had sunk to a three-year low of 110.12 yen before the intervention took place, but in late New York trade was up 0.6% at 111.44 yen.

An official from Japan's Ministry of Finance said it had sold yen for dollars acting through the US Federal Reserve.

Exports are vital to Japan's economy and a weaker yen makes them more competitive in global markets.

Important signal

The dollar has fallen against the yen by nearly 3% since 19 September, just ahead of the G7 meeting of rich nations which ended with a call for market forces to set exchange rates.

On Tuesday the dollar had already fallen back even before the release of weak US economic data, including a worse-than-expected drop in consumer confidence.

The intervention helped the dollar to pull back some ground against other currencies.

The euro climbed above $1.17 at one point on Tuesday, before falling back to $1.1662 - still up 0.6% on the day.

Analysts said the fact that Japan intervened in the market with the US Federal Reserve was significant.

"It sends a signal to the market that Japan's intervention has passive US approval," said Steven Englander, chief currency strategist at Barclays Capital in New York.