(Updates as of 1431 ET)

By Alden Bentley, Amanda Cooper and Kevin Buckland

NEW YORK/LONDON/TOKYO, March 27 (Reuters) - Global

shares advanced cautiously on Wednesday, led by an early rally

in Japanese stocks as the yen sagged to its weakest since 1990,

prompting intervention fears, while benchmark U.S. Treasury

yields fell after a strong 7-year note auction.

Trading was subdued with the dollar stuck in a narrow range

below its overnight high against the yen as markets marked time

ahead of Friday's much-anticipated U.S. inflation report, that

few will be around to digest at the start of the long Easter

weekend in the United States and many other countries.

The yen, which has lost more than 7% in value against the

dollar this year already, weakened as far as 151.975 to the

dollar, prompting Japan's three main monetary authorities to

hold an emergency meeting on Wednesday to discuss the currency.

Market participants took this as a signal officials were

ready to intervene in the market to stop what they described as

disorderly and speculative moves in the yen, a carry-trade

favorite for speculators to short against other currencies

because of its lower interest rates.

"The news this morning was the Japanese yen. They're always

concerned, even well before this for so many years, about hedge

funds coming in and taking advantage of the yen," said Quincy

Krosby, chief global strategist at LPL Financial, in Charlotte,

NC. "So they typically come out with the warning to notify the

market that 'we could come in and thwart your ambition in our

currency market'."

The yen has been sliding despite the Bank of Japan's first

interest rate hike for 17 years last week, as traders expect

very gradual tightening and possible delays to long-expected

Federal Reserve easing.

BOJ board member Naoki Tamura reinforced the dovish outlook

on further tightening on Wednesday, saying the central bank

should "move slowly but steadily toward policy normalisation".

On Wall Street, the Dow Jones Industrial Average rose

0.82%, outpacing the other main indexes because of a strong

rally in Merck ( MRK ) after the U.S. Food and Drug

Administration approved its therapy for adults suffering from a

rare lung condition.

The S&P 500 gained 0.46%, and the Nasdaq Composite

was up 0.21%.

The Nikkei closed 0.9% higher. MSCI's gauge of

stocks across the globe rose 0.31%, while

Europe's STOXX 600 index added 0.13%.

"It's choppy, directionless trading, and there's a good

reason for that: we've hit that time of the quarter when

rebalancing flows are impacting the market," said Tony Sycamore,

a strategist at IG.

Another reason is that two key events - the release of the

U.S. Federal Reserve's favoured Personal Consumption

Expenditures Inflation Index and public comments from Fed Chair

Jerome Powell - come on Friday, when most markets are closed for

a holiday, he added.

Good Friday is a market but not a government holiday in the

United States.

DOLLAR/YEN IN FOCUS

Against the yen, the dollar was 0.11% easier at

151.39. The dollar index was up 0.08% at 104.37, just

below Friday's five-week high of 104.49, while the euro

was down 0.11% at $1.0818.

"If there's any kind of intervention, it only has a

significant lasting impact if the direction of travel has

already begun to turn," Guy Miller, chief market strategist at

Zurich Insurance Group, said.

U.S. 10-year Treasury yields were 3.6 basis

points lower at 4.198%. They had fallen as far as 4.182%, the

lowest in two weeks, after the Treasury easily sold $43 billion

of seven-year notes amid expectations that the Federal Reserve

will be lowering rates soon.

Kim Rupert, managing director of global fixed income at

Action Economics in San Francisco, described the auction as

"stellar."

"It's a good time to pick up some yield," she said.

Traders are trying to gauge which of the big central banks -

the Fed, ECB or Bank of England - will be first to cut rates

this year.

Meanwhile, Sweden's Riksbank left interest rates unchanged

but indicated it was likely to start easing monetary policy in

either May or June.

Spot gold rose 0.53% to $2,190.08 an ounce as it

continued to search for a short-term floor following its surge

to a record $2,222.39 last week. U.S. gold futures gained

0.53% to $2,188.70 an ounce.

Cryptocurrency bitcoin fell 1.80% to $68,558.00.

Oil fell for a second day after a report that crude

stockpiles surged in the U.S., the world's biggest oil user, and

on signs major producers are unlikely to change their output

policy at a technical meeting next week.

Brent crude futures settled at $86.09 per barrel,

down 0.19%. U.S. crude futures settled down 0.33% at

$81.35 a barrel.

(Additional reporting by Dhara Ranasinghe in London and Kevin

Buckland in Tokyo; Editing by Andrea Ricci, William Maclean,

Kirsten Donovan)