By Tetsushi Kajimoto and Satoshi Sugiyama

TOKYO Japan's top financial diplomat said on Monday the yen was still perceived as a safe haven asset like the Swiss franc and U.S. dollar despite its recent weakness, and was benefiting from safe-haven demand due to the conflict in the Middle East.

Masato Kanda, vice finance minister for international affairs at Japan's Ministry of Finance (MOF), also said that if excessive moves occurred in the currency market, the government would take steps such as raising interest rates or intervening in the market.

"We will firmly take appropriate steps when necessary," Kanda told reporters during an ad hoc news conference.

Kanda declined to comment when asked about recent remarks by a deputy bureau chief of the International Monetary Fund (IMF) who said that Japan had not put the necessary conditions in place for the government to conduct currency intervention.

Various factors determine currency rates and long-term interest rates are "only one factor", Kanda said.

As for the ongoing conflict between Israel and Palestinian militant group Hamas, Kanda said he could not predict the impact as the situation was "fluid" and no one could know if renewed rises in oil prices might hit Japan's economy hard.

"Relatively speaking, global funds are still flowing into the dollar, yen and Swiss franc and pound, with many people describing the moves as 'textbook-style' moves," he said, referring to safe-haven flows.

(Writing by Tetsushi Kajimoto; Editing by Toby Chopra and Mark Potter)