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Group of Seven sources told Reuters earlier the call was about steps to calm financial markets roiled by the nuclear crisis.

Economics Minister Kaoru Yosano, however, insisted the yen and Japanese stock markets were not in a state of turmoil and that the government would like the G7 to merely provide a psychological prop to markets, rather than intervene.

The yen spiked to a record high against the dollar, while shares in Japan and elsewhere in Asia fell on Thursday after U.S. officials said the risk of a catastrophic radiation leak from an earthquake-crippled Japanese nuclear plant was rising.

The Japanese currency bolted higher amid speculation Japanese insurers would have to repatriate funds to pay for massive claims following Friday's 9.0 magnitude quake and the devastating tsunami that ravaged Japan's northeast.

The disaster and subsequent nuclear crisis have wiped hundreds of billions of dollars off global stock markets.

But Japan's Finance Minister Yoshihiko Noda, Yosano and other officials dismissed such talk about repatriation and said speculation, not fund flows, was responsible for the currency's surge, which threatens to add further pressure on the quake-hit economy.

"I don't think stock and currency markets are in a state of turmoil," Yosano said, when asked whether the G7 advanced nations should jointly intervene in the currency market to stem yen rises.

"We would like to get psychological support from the G7," he told Reuters in an interview on Thursday.

Noda confirmed the G7 was holding a teleconference at 6 p.m. ET on Thursday and said Japan would explain to the group the damages from the quake and the situation in financial markets.

He declined to comment on a possibility of currency market intervention to weaken the yen, but markets interpret reminders about monitoring currency moves as a warning that the authorities could step in if they thought the yen was moving too rapidly.

"Market moves have been nervous amid speculation while trade has been thin," Noda told reporters. "I will be closely watching market moves today.

While government officials were stepping up their verbal intervention, the Bank of Japan continued to pump massive amounts of cash into the money market to make sure it would not seize up, with the latest offer of 5 trillion yen in same-day funds. It had offered a record 22 trillion on Monday, through a combination of same-day and longer tenor funds.

G7 SUPPORT

Other Group of Seven sources told Reuters that G7 finance officials would discuss what to do to calm global financial markets.

The unfolding disaster in Japan has sent fear coursing through markets, hitting shares and other riskier assets such as commodities while boosting safe-haven government debt, as investors struggle to get a fix on the scale of the nuclear crisis and the tsunami's economic and human toll.

Operators of the Fukushima Daiichi nuclear complex, 240 km (150 miles) north of Tokyo, were they were trying again on Thursday to use military helicopters to douse the plant's overheating reactors.

"Fear is the only factor driving the market today and if you look at news about temperatures rising, things exploding, you're not going to trade calmly, right?" said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

The yen spiked around 4 percent against the dollar, initially driven by speculation that Japanese insurers would have to repatriate funds to pay for massive claims following last Friday's 9.0 magnitude quake and the devastating tsunami it triggered.

That run-up set off a wave of stop-loss and options-related selling that sent the currency rocketing as far as 76.25 to the dollar on electronic trading platform EBS in increasingly chaotic trading, before easing to around 78.90.

"It's mayhem out there," said one trader at an Australian bank in Sydney as liquidity evaporated and bids were pulled. "The yen's been moving a big figure a second on occasions. A lot of people are crying out for the central banks to step in."

INTERVENTION ALERT

Japan's Finance Minister Yoshihiko Noda blamed speculation for the spike in the yen and said he would closely watch market action. Markets usually interpret such comments as a reminder that the authorities could intervene to curb the currency.

"There's a real possibility that authorities would intervene to calm the markets, though I don't think it will be heavy," said Junya Tanase, a foreign exchange strategist at JPMorgan Chase in Tokyo.

Japan's Nikkei .N225 fell about 1.8 percent, with big exporters such as industrial robot maker Fanuc (6954.T) and car maker Toyota (7203.T), whose overseas earnings are eroded by a stronger currency, taking the most points off the index. .T

Fanuc fell 5.2 percent and Toyota 4.2 percent.

Japanese stocks had suffered their biggest two-day rout since the 1987 crash on Monday and Tuesday before rebounding nearly 6 percent on Wednesday.

Asian shares outside Japan .MIAPJ0000PUS were down about 1.2 percent, with Hong Kong's Hang Seng .HSI down 1.8 percent.

Benchmark 10-year Japanese government bond futures rose 0.10 point to 139.82, and U.S. Treasuries firmed, with the 10-year yield slipping toward a three-month low. <JP/>

Storms in the United States and Europe and escalating fuel prices drove Memphis, Tennessee-based FedEx last month to slice its profit outlook by 25 cents per share to a range of 70 to 90 cents a share for the quarter ended February 28.

Analysts on average expect earnings of 82 cents a share, excluding items, up from 76 cents a year ago, according to Thomson Reuters I/B/E/S. Revenue is seen rising to $9.6 billion from $8.7 billion.

The company's third quarter includes the peak shipping season, in which it forecast record holiday volume.

More important than the quarter, analysts say, is whether oil prices and Japan's earthquake and nuclear crisis stifle longer-term consumer demand for goods shipped by the No. 2 package delivery company.

FedEx and United Parcel Service are considered economic bellwethers, moving a huge share of shipped packages.

In its trucks and planes, FedEx handles goods equivalent to 4 percent of U.S. gross domestic product and 1.5 percent of global GDP. UPS ships goods equal to 6 percent of the U.S. GDP and 2 percent of global GDP.

"I wouldn't be surprised if there was a moderation down in Q4 guidance because of elevated fuel prices, but my view is that it shouldn't matter because investors are looking to fiscal 2012, and 2012 should be a much better year than 2011," said Sterne Agee analyst Jeffrey Kauffman.

The Federal Reserve on Tuesday sounded more upbeat on the U.S. economy, noting gradual improvement in overall labor market conditions. Household spending, and business investment in equipment and software are expanding, the Fed said.

Jefferies & Co, which rates FedEx a "buy" with a $112 price target for calendar year-end 2011, said "we've been impressed with most freight volumes year-to-date despite weather issues" and expects FedEx management to reaffirm solid volumes.

FedEx shares fell 2.7 percent on Wednesday to close at $85.28, down more than 3.5 percent from a year earlier, having traded as high as $98.52 in February. The Dow Jones transportation index gained about 13 percent in the past year.

FedEx said in February that oil prices and weather disruptions would also affect the earnings outlook for fiscal 2011, ending in May.

The company in December had boosted its profit outlook to between $5.00 and $5.30 a share, from its prior view of $4.80 to $5.25, on the back of record holiday shipments.

Analysts now look for $4.87 a share for 2011 on average, rising to $6.36 for 2012, according to Thomson Reuters I/B/E/S.

FedEx can recoup much of the rising fuel costs with surcharges, Sterne Agee's Kauffman said. "I'm more concerned about what it might do to everybody else's discretionary spending," he said.

The Dow also neared its 2010 closing level in the year's most heavily traded session while the CBOE market volatility index surged, a sign the market would continue to gyrate and faced possible further losses in the near term.

The VIX jumped 21 percent, the biggest percentage gain since February 22. At 29.31, Wall Street's so-called fear index is up more than 46 percent this week. During Wednesday's session it briefly breached the psychologically important 30 level.

Phil Flynn, senior market analyst with PFG Best in Chicago, said markets were trading "headline to headline, so I'm telling people not to overcommit to markets at this time."

Stocks plummeted after the European Union's energy commissioner said, "In the coming hours, there could be further catastrophic events, which could pose a threat to the lives of people on the island."

Uncertainty about Japan drove investors to seek safer assets like bonds. More than three stocks fell for every one that rose on the New York Stock Exchange while more than two-thirds of Nasdaq companies fell.

Trading volume on the New York Stock Exchange, the American Stock Exchange and Nasdaq was 11.1 billion shares, sharply above last year's daily average of 8.47 billion.

"The trading volume suggests a lot of the trade is due to panic, and soon buyers will realize there wasn't much basis for the move," said Komal Sri-Kumar, who helps manage $116 billion as chief global strategist at TCW Group Inc in Los Angeles.

The Dow Jones industrial average was down 242.12 points, or 2.04 percent, at 11,613.30. The Standard & Poor's 500 Index was down 24.99 points, or 1.95 percent, at 1,256.88. The Nasdaq Composite Index was down 50.51 points, or 1.89 percent, at 2,616.82.

The S&P has fallen 3.6 percent for the week so far.

The iShares MSCI Japan Index Fund slid 3.8 percent to $9.65 and is down 11 percent this week in the aftermath of the earthquake and tsunami, which struck Japan on Friday.

Rising radiation levels caused workers to withdraw briefly from a quake-damaged nuclear power plant. Nikkei dollar-denominated futures were down 5.1 percent.

Nuclear-related stocks slid on bets the crisis would cripple the industry's growth worldwide. Cameco Corp shed 9 percent to $29.64 and Shaw Group dropped 3.8 percent to $32.83 on volumes many times their 10-day averages. The Global X Uranium ETF lost 6.6 percent.

"We're not recommending any new purchases of uranium stocks," said Joshua Brown, vice president of investments at Fusion Analytics in New York. "The growth picture there is night and day compared with last week."

U.S.-listed shares of Toyota Motor Co dropped 1.2 percent to $80.41 after the automaker said it would continue to halt operations at its 12 main Japanese assembly plants.

Apple Inc and International Business Machines Corp sank after both received analyst downgrades. Apple lost 4.5 percent to $330.01 and IBM was off 3.8 percent to $155.

(Editing by Kenneth Barry)