Japan warns as traders push yen to intervention zone before key BOJ speech?

* Japan spent 11.7 trillion yen on largest intervention over one month

* Finance Minister Satsuki Katayama signals readiness to act on FX

* Yen erases gains from intervention, touching 160 per dollar (Adds details on economy, analyst comments in 12th-14th paragraphs.)

By Makiko Yamazaki and Rocky Swift

TOKYO, June 3 (Reuters) - The yen weakened to levels that preceded intervention by Tokyo last month, prompting fresh warnings by the finance minister on Wednesday ahead of a highly anticipated speech by the central bank governor.

The yen briefly touched the critical 160 per dollar line in early trading, the first time since April 30 and wiping out all gains made after a record amount of intervention by Japan in foreign exchange markets.

"With regard to foreign exchange, we will respond appropriately at any time as necessary," Finance Minister Satsuki Katayama said at a press conference after the government finalised an extra budget.

Bank of Japan Governor Kazuo Ueda will deliver a speech later in the day that could reveal his thinking on the prospects of a June rate hike as the war in Iran heightens price pressures.

"Governor Ueda is likely to maintain a positive stance toward a rate hike, while also referring to uncertainty surrounding the situation in the Middle East," said Hirofumi Suzuki, chief FX strategist at SMBC. "He is likely to avoid providing any definitive signal...as a result, his comments may not give dollar/yen much clear direction."

But a key question for markets is whether fiscally dovish Prime Minister Sanae Takaichi and her government are on board with further tightening by the central bank.

Katayama said she is largely aligned with the BOJ governor on various aspects, adding that Ueda and Takaichi held "very constructive discussions" in a recent meeting.

Data on Friday showed that Japan spent 11.7 trillion yen ($73.14 billion) since April to support the yen in what was the largest-ever intervention ?round in a month.

'160 IN NEON'

The currency slid to a near two-year low of 160.725 per dollar on April 30 before jolting to as strong as 155 in what is believed to be multiple bouts of yen-buying intervention.

But the currency has ground weaker ever since, spurring expectations of further action by Tokyo to defend its currency. Yen-buying intervention requires selling foreign assets, of which Japan held about $1 trillion at the end of April.

"Intervention odds click above zero as 160 nears and click substantially higher if 162 trades," Brent Donnelly, president at analytics firm Spectra Markets, wrote in a note. The three-month-long Middle East crisis has hit Japan's economy and currency particularly hard, as the nation imports most of its oil and must pay for it in dollars. That exacerbated an already weakening trend in the yen amid the BOJ's cautious approach to raising interest rates and expectations of expanded fiscal stimulus.

Previous Japanese administrations have focused on the speed of change in markets in deciding whether to intervene, but Takaichi's government appears more centred on defending key levels.

"I think they have successfully put in the minds of market participants that 160 is where we've got to be careful," said Bart Wakabayashi, branch manager at State Street in Tokyo. "They have definitely put 160 in neon as a level where we're going to see increased jawboning and tension."

($1 = 159.9600 yen)

(Reporting by Makiko Yamazaki; Editing by Shri Navaratnam and Sam Holmes)