* Euro below $1.20 on profit-taking after record long positions
* Dollar index hits 11-day high
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Jemima Kelly
LONDON, Jan 9 (Reuters) - The yen reached a five-day high on Tuesday, after the Bank of Japan trimmed its purchases of long-dated government bonds in market operations, stoking speculation the central bank could start to wind down its huge stimulus policy this year.
Weakness against the Japanese currency was the exception for the dollar, which was trading at an 11-day high against a basket of six major currencies, continuing a recovery from four-month lows plumbed at the start of the year.
Against the yen, the dollar lost as much as half a percent to trade at 112.50 to the dollar, easing back down from a two-week high of 113.40 yen touched on Monday.
Since it adopted its yield-curve-control policy in 2016, the BOJ has occasionally tweaked its bond operations, with officials saying any changes are meant to keep bond yields in line with its policy goal and not to telegraph hints on its future policy .
While Tuesday’s move was considered largely technical, it surprised some market players and emboldened those analysts who see an exit from the monetary easing programme coming by the end of 2018.
“They reduced the amount of bonds purchased in the market, which is being seen as the start of a tapering approach, but we’ve been expecting this for quite a while... so I wouldn’t expect too much yen strength for now,” said UBS Wealth Management currency strategist Daniel Trum, in Zurich.
“We expect dollar/yen to rebound to 115, because the global economy is strong and risk aversion is low, and therefore demand for safe havens like the yen is relatively limited,” he added.
Most economists surveyed in a Reuters poll in December said the BoJ would start scaling back its stimulus in late 2018 or after.
The euro - which last week threatened to reach its highest levels in three years, hitting a four-month high - slipped further below $1.20, trading down 0.3 percent on the day at a 12-day low of $1.1921, with investors cautious after a months-long rally.
“I don’t think right now levels substantially above $1.20 are justified,” said Commerzbank currency strategist Esther Reichelt, in Frankfurt.
“I know the market is very optimistic about the euro, but if you look at the data and the central bank, the ECB (European Central Bank) is still on an expansionary path.”
Many analysts said a correction was inevitable for the common currency after an almost 5 percent rally against the dollar in just six weeks thanks to signs of acceleration in the euro zone economy.
Speculators’ net long position in euro/dollar futures in Chicago reached a record high last week, data from the Commodity Futures Trading Commission showed on Friday, pointing to potential for profit-taking.
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 Jemima Kelly, additional reporting by Hideyuki Sano in Tokyo, editing by Larry King and Adrian Croft)