* Fed minutes signal cautious approach to further rate hikes
* BOJ official rules out imminent hike in bond yield target
* ECB also cautious in face of stronger data
* Bond yields fall across board
* Euro zone periphery govt bond yields tmsnrt.rs/2ii2Bqr
By Dhara Ranasinghe
LONDON, May 25 Borrowing costs across the euro
area fell on Thursday on further signs that major central banks
are wary of stepping back from ultra-loose monetary policies too
U.S. Federal Reserve policymakers agreed they should hold
off on raising rates until it was clear a recent U.S. economic
slowdown was temporary, though most said a hike was coming soon,
minutes from their last policy meeting showed on Wednesday.
Bank of Japan board member Makoto Sakurai meanwhile on
Thursday ruled out the chance of an imminent hike in the central
bank's bond yield target, stressing the need to maintain its
massive stimulus programme to prop up inflation and fend off
overseas economic risks.
As is the case in the euro zone, growing signs of life in
Japan's economy have presented the BOJ with a fresh
communications challenge, pushing it to be clearer with markets
on how it might dial back its stimulus, even though such action
remains a long way off.
In the single-currency bloc, European Central Bank officials
have indicated this week that while monetary policy will reflect
an improving economy, inflation remains weak so there is no need
to deviate from the policy path already laid out.
"The BOJ and the ECB are the ones with the long-standing
structural weaknesses and there are bigger fears about the risk
of a taper tantrum," said Chris Scicluna, head of economic
research at Daiwa Capital Markets.
"That's why the ECB and BOJ will be a lot more cautious in
their communication as well - they don't want to take any risks
even though things are going well in both Europe and Japan."
The tone of central bank wariness has comforted
rate-sensitive bond markets, although traders expect the next
Fed hike at its June 13-14 meeting.
In Germany, the euro zone's benchmark issuer, yields were
2-3 basis points lower across the curve.
The 10-year Bund yield fell 3 bps to 0.37 percent
, almost 10 bps below seven-week highs hit earlier
Other euro zone yields slipped 3-4 bps, while U.S. Treasury
yields dipped in early London trade.
Trade was generally subdued due to a public holiday in a
number of countries across Europe.
The market was also focused on an OPEC meeting in Vienna
where the cartel is expected to extend output cuts into 2018,
adding at least nine months to an initial six-month curb in the
first half of this year.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Reporting by Dhara Ranasinghe; Editing by Mark Trevelyan)