* Yen set for biggest weekly gain in over 2 months after

Japan's intervention

* Analysts question intervention's long-term impact,

citing persistent weak fundamentals

* ECB and BOJ hold rates but signal possible hikes in

June to address energy inflation

By Rocky Swift

TOKYO, May 1 (Reuters) - The yen eased slightly against

the dollar on Friday, but was still poised for its steepest

weekly gain in more than two months after Japanese authorities

stepped in to lift the currency from near two-year lows.

Investors remained on high alert for further intervention

from Japan's Ministry of Finance (MOF), with May 1 holidays

thinning markets and Tokyo heading into a three-day shutdown

next week.

"The difficulty is they are sort of fighting against some

underlying fundamentals there," Ken Crompton, the head of rates

strategy at National Australia Bank, said about Japan's

intervention efforts.

"The weak yen is probably there for a reason and how

successful the MOF will be in fighting against the tide on a

sustained basis is sort of hard to see at the moment," he added.

The yen stepped back 0.25% against the greenback to

156.99 per dollar, but Thursday's surge put the Japanese

currency on course for a 1.8% jump this week, the most since

mid-February.

The dollar index, which measures the greenback

against a basket of currencies, was little changed at 98.14. The

euro edged 0.03% lower to $1.1727.

Two sources familiar with the matter told Reutersthat

officials had intervened to buy the yen, after it hit its

weakest level against the dollar since July 2024. The sudden

jolt in the dollar-yen rate occurred in London trading hours and

followed earlier comments from Japanese Finance Minister Satsuki

Katayama that the time for "decisive" action was nearing.

Katayama also advised reporters to hang on to their phones

at all times during upcoming holidays.

"Past intervention has had only a temporary effect on the yen

if the underlying fundamentals haven't shifted," Kristina

Clifton, senior currency strategist at Commonwealth Bank of

Australia, wrote in a note. "Continued yen depreciation may

prompt several rounds of intervention, which in turn would cause

larger two-way swings in USD/JPY."

In the oil market, prices remained elevated following

threats by Tehran of "long and painful strikes" on U.S.

positions if Washington renewed attacks on Iran, while U.S.

President Donald Trump faces a deadline to end the conflict.

The currencies of Japan and other nations dependent on

energy imports had been in decline since late February, when

U.S. and Israel started aerial bombardment of Iran, leading to

the closure of the Strait of Hormuz shipping lane for oil.

Trump is expected to notify Congress that he plans a 30-day

extension of the operation or to disregard a 60-day legal

deadline on it entirely, with his administration arguing that a

current ceasefire with Tehran marked an end to the conflict.

The dollar index slid 1.76% in April after a surge in March

that underscored the U.S. economy's relatively lower exposure to

higher oil prices compared with the euro zone and Japan.

The European Central Bank and the Bank of England kept

interest rates unchanged on Thursday, as expected, following

holds earlier in the week by the Federal Reserve and Bank of

Japan. Even so, the ECB and BOJ signaled readiness to hike rates

as soon as June to contend with imported energy inflation.

"Combined with the Bank of Japan's 'hawkish hold,' if the

market starts to price in a rate hike at the next meeting in

June, yen buying could gather momentum," Sakura Koike, an

analyst at Mitsubishi UFJ Bank, said in a note.

In cryptocurrencies, bitcoin fell 0.17% to

$76,330.16, and ether declined 0.27% to $2,257.53.