* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh
By Saikat Chatterjee
LONDON, July 23 (Reuters) - The yen trimmed early gains on Monday as traders consolidated positions after reports the central bank was debating moves to scale back its massive monetary stimulus ignited a brief rally in the Japanese currency.
With investors wary of buying the yen aggressively unless some concrete measures were seen from the Bank of Japan, the yen consolidated early gains.
"We had a big move in the yen on the back of the spike in bond yields but with inflation low and corporate profitability momentum struggling, some concrete steps from the BOJ will be needed to sustain this move higher," said Timothy Graf, head of macro strategy at SSGA in London.
The Bank of Japan, facing stubbornly low inflation, is in unusually active discussions before this month's policy decision, with changes to its interest-rate targets and stock-buying techniques on the table, people familiar with the central bank's thinking told Reuters.
Expectations the central bank may unveil some measures at its next monetary policy meeting on July 30 and 31 sent bond yields surging and the yen rallying to a two-week high against the dollar and the euro.
The BOJ's current policy, adopted in mid-2016, consists mainly of negative short-term interest rates, keeping the 10-year yield around zero percent and buying about six trillion yen of stocks through exchange traded funds (ETFs).
The Japanese yen rallied half a percent against the euro to 130.70 yen, its highest since July. 11. It rose by a similar margin against the dollar 110.90 and against sterling at at 145.85 yen.
But by early afternoon, the yen had trimmed much of its gains.
Also pushing the yen up were comments by U.S. President Donald Trump on Friday criticising the greenback's strength, which in turn hit the Japanese stock markets and triggered a further unwinding of short yen positions.
CNBC reported on Friday that Trump was worried the Federal Reserve will raise interest rates twice more this year. Trump said the Fed's policy tightening and the strong dollar could hurt the U.S. economy.
With short bets against the yen doubling to nearly 60,000 contracts in the latest weekly data, according to CFTC, some traders expected more upside for the yen in the short term.
Broader moves in currency markets were muted. The dollar index, a measure of its value against a basket of six major currencies, was down 0.1 percent at 94.327, slipping further from a one-year high of 95.656 touched on July 19.
Positioning data also offered little support for the dollar with net long positions in the greenback showing some signs of peaking after a recent buildup in long dollar bets.
Reporting by Saikat Chatterjee; Editing by Alison Williams