The dollar held steady at 76.88 yen in Tokyo morning trade, marginally up from 76.83 yen in New York late Monday.

The euro fetched $1.4516 and 111.59 yen, compared with $1.4510 and 111.52 yen.

Investor risk-appetite has improved as a rebound in US consumer spending helped to lift stock markets, dealers said, after markets took positive cues from last week's speech from US Federal Reserve chief Ben Bernanke.

Stocks extended gains on speculation of "more monetary policy stimulus from the US Federal Reserve and better news on US consumer spending which eased fears the economy was falling off a cliff," National Australia bank said in a note.

The benchmark Nikkei 225 index of the Tokyo Stock Exchange was up 1.42 percent in late morning trade as a softer yen boosted exporter shares.

Market reaction has been muted towards the election of finance minister Yoshihiko Noda as ruling party head -- and therefore next prime minister.

"It's likely that with higher taxes and more fiscal austerity with Noda as PM that deflationary pressure will not be alleviated, which will keep bond yields low," said an equity trader at a foreign brokerage.

"On the upside, corporate borrowing costs are not going to rise, but neither will the dollar-yen rate, which serves as a heavier weight on Japan exporter shares right now," he told Dow Jones Newswires.

Investors welcomed news that US consumer spending, a key driver of the economy, rose 0.8 percent in July, its biggest increase since February.

In a speech on Friday, Bernanke did not announce new monetary easing measures but indicated the US central bank may be prepared to do so later.

Currency rates were unmoved by data Tuesday showing that Japan's jobless rate stood at 4.7 percent in July, up 0.1 percentage point from the previous month, excluding figures from the disaster-hit northeast of the country.

Copyright AFP (Agence France-Presse), 2011