* Japan vice financial minister says watching FX moves
* Dollar, euro climb versus yen on intervention risk
* Rise in equities, oil boost Australian dollar, sterling (Adds comment, updates prices)
By Wanfeng Zhou
NEW YORK, May 18 (Reuters) - The dollar rose against the yen on Monday as a rally in stocks revived risk appetite and comments from a Japanese official spurred speculation authorities in Japan may intervene to slow its currency's rise.
The rise in world equities and strengthening crude oil prices fueled the view that the global downturn may be slowing. That also lifted the euro, sterling and commodity currencies such as the Australian and New Zealand dollars.
The yen retreated from a two-month high near 94.50 to the dollar and slid versus other currencies. Japan's vice finance minister, Kazuyuki Sugimoto, said he was watching foreign exchange market moves carefully, and he hoped they would not have a negative effect on the economy. For more, See[ID:nTKF104381].
"A combination of improved equity market and the comments out of Japan has weakened the yen for the day," said Fabian Eliasson, vice president of currency sales at Mizuho Corporate Bank in New York.
But analysts said while Japanese officials may step up efforts to slow the yen's rise, which hurts the country's exports, any action beyond verbal intervention is seen as unlikely.
In late trading in New York, the dollar rose 1.2 percent to 96.36 yen <JPY=>, well above a two-month low at 94.55 yen hit earlier in the session on electronic trading platform EBS.
The safe-haven yen rallied sharply last week, with the dollar losing 3.8 percent -- its biggest weekly drop since last October -- as optimism over the global economic outlook faded following weak data in the United States and Europe.
"Basically, the MOF put the market on notice that they don't want to see yen appreciation beyond 95 to the dollar," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey.
The euro gained 1.7 percent to 130.59 yen <EURJPY=> after earlier hitting a three-week low at 126.99 yen, according to Reuters data.
The euro was up 0.4 percent at $1.3548 <EUR=>. The ICE Futures' dollar index, a gauge of the greenback's value against six major currencies, fell 0.5 percent to 82.577 .DXY.
After a pullback last week, U.S. stocks and risk appetite rebounded on Monday, prompting investors to take on additional risk with currencies that provide higher yields than the greenback and yen.
"I think all of the moves are consistent with the general improvement in risk appetite," said Omer Esiner, senior market analyst at Ruesch International in Washington. "We have also seen the dollar bloc currencies (Australian and New Zealand dollars) rallying."
The Australian dollar rose 2.4 percent to US$0.7663 <AUD=>, while the New Zealand dollar gained 1.7 percent to US$0.5950 <NZD=>.
With a light economic calendar in coming days, Mizuho's Eliasson said the currency market is likely to eye developments in the global stock and commodities markets for direction.
If equities and commodities prices rise, "you normally see commodity-driven, higher-yielding currencies perform well accordingly," he said.
Still, some analysts said investors remained cautious about the global economic outlook. Uncertainty about just how sustainable any recovery in the economy will be recently halted a nascent rebound in equities and riskier assets.
In other currencies, sterling gained 1.1 percent to $1.5334 <GBP=> as investors brushed off calls for a dissolution of Parliament in the latest twist in an expenses scandal involving British lawmakers. [ID:nLI275595]. (Additional reporting by Gertrude Chavez-Dreyfuss; editing by Dan Grebler)