* Japanese PM says BoJ should keep ultra-loose monetary policy

* Euro up after ECB official opens door to heftier September rate rise

* Sterling gains after hawkish comment from BoE official

By Samuel Indyk and Gertrude Chavez-Dreyfuss

LONDON/NEW YORK June 21 (Reuters) - The Japanese yen plunged against the U.S. dollar on Tuesday to its lowest level since October 1998, as the Bank of Japan's ultra-loose monetary policy was in stark contrast with an aggressive Federal Reserve determined to stamp out soaring inflation.

The yen dropped to a new 24-year low of 136.330 per dollar JPY=EBS , extending losses which have already seen it shed more than 18% of its value versus the greenback this year.

"You're still looking at a trade where there is aggressive tightening by the Fed while the BoJ has yet to really budge. There is potential here to see a further leg of weakness in the yen," said Edward Moya, senior market analyst, at OANDA in New York.

The currency lost more ground after the BoJ on Friday dashed any expectations of a change in policy and continued to stand alone among other major central banks in its commitment to ultra-easy monetary settings.

Instead it has been ramping up bond-buying to hold 10-year yields in a targeted 0% to 0.25% range. But despite its efforts, the yield remains at the upper end of that target JP10YT=RR

Earlier in the day, Japanese Prime Minister Fumio Kishida effectively gave the green light to sell yen when he said the BoJ should maintain its ultra-loose monetary policy.

He brushed aside calls for the policy to be tweaked to target rising living costs.

The yen's decline was also accelerated by some stop-loss orders broken around the 135.60 level, according to analysts, who noted New York traders had been absent on Monday, a U.S. public holiday.

By midmorning trading, the Japanese currency was at 136.20 yen per U.S. dollar, just off the earlier 24-year low. The yen was also down 1.3% to 143.77 per euro, its lowest level since June 9 EURJPY=EBS .

The yen has lost more than any other major currency against the greenback, as the BoJ's dovish policy stance diverged from the general hawkishness among global policymakers.

In other currencies, the dollar index was down 0.2% at 104.23 =USD , with the euro firmer on the day, at $1.0553 EUR=EBS , up 0.4%.

The European single currency rose after European Central Bank Chief Economist Philip Lane said the ECB will raise interest rates by 25 basis points at its July meeting, but the size of its September hike is still to be decided, suggesting a larger 50 basis point hike could be in the cards.

Sterling also rose against the dollar, up 0.4% at $1.2290 GBP=D3 on hawkish comments from Bank of England policymakers.

BoE chief economist Huw Pill said on Tuesday the central bank would need to raise interest rates further in the near future to tackle surging inflation.

The Australian dollar AUD=D3 rose 0.4% to US$0.6977 after Reserve Bank of Australia Governor Philip Lowe signaled a lot more policy tightening ahead, although he played down the chances of a supersized 75 basis point rate hike.

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Currency bid prices at 10:00AM (1400 GMT) Description

RIC

Last

U.S. Close Pct Change

YTD Pct

High Bid

Low Bid

Previous

Change

Session

Dollar index

=USD

104.1800

104.4400

-0.23%

8.903%

+104.4600 +103.9300 Euro/Dollar

EUR=EBS

$1.0560

$1.0510

+0.48%

-7.11%

+$1.0583

+$1.0509 Dollar/Yen

JPY=EBS

136.2050

135.0600

+0.86%

+18.33%

+136.3250 +134.9400 Euro/Yen

EURJPY=

143.84

141.97

+1.32%

+10.37%

+143.8900 +141.9600 Dollar/Swiss

CHF=EBS

0.9652

0.9677

-0.26%

+5.82%

+0.9683

+0.9641 Sterling/Dollar GBP=D3

$1.2283

$1.2248

+0.32%

-9.15%

+$1.2324

+$1.2243 Dollar/Canadian CAD=D3

1.2924

1.2981

-0.44%

+2.22%

+1.2985

+1.2907 Aussie/Dollar

AUD=D3

$0.6979

$0.6954

+0.34%

-4.01%

+$0.6987

+$0.6935 Euro/Swiss

EURCHF=

1.0192

1.0168

+0.24%

-1.71%

+1.0216

+1.0168 Euro/Sterling

EURGBP=

0.8595

0.8579

+0.19%

+2.33%

+0.8610

+0.8569 NZ

NZD=D3

$0.6343

$0.6330

+0.18%

-7.35%

+$0.6363

+$0.6318 Dollar/Dollar

Dollar/Norway

NOK=D3

9.7880

9.8920

-1.00%

+11.17%

+9.9015

+9.7770 Euro/Norway

EURNOK=

10.3372

10.4119

-0.72%

+3.24%

+10.4236

+10.3170 Dollar/Sweden

SEK=

10.0737

10.1052

+0.08%

+11.71%

+10.1297

+10.0380 Euro/Sweden

EURSEK=

10.6392

10.6304

+0.08%

+3.96%

+10.6591

+10.6180

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Falling yen Link

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Reporting by Samuel Indyk in London and Gertrude Chavez-Dreyfuss in New York; Writing by Saikat
Chatterjee; Editing by Sujata Rao and Jonathan Oatis