* Report of Japan extra budget lifts risk appetite, shores up USD
* BOJ stands pat, wrong-foots those who had bet on easing
* BOJ chief Kuroda's press conference at 0630 GMT awaited
* Aussie struggles near 3-week lows vs dollar (Updates with latest dollar/yen move)
By Shinichi Saoshiro
TOKYO, Oct 30 (Reuters) - The dollar bounced against the yen on Friday, as a report that Japan may unveil a supplementary budget lifted risk appetite and helped the greenback pare earlier losses.
The dollar was up 0.1 percent at 121.24 yen JPY= .
The U.S. currency had earlier dipped to as low as 120.29 after the Bank of Japan stood pat on monetary policy, disappointing some speculators who had bet that the central bank would expand its already massive stimulus.
The greenback received a reprieve, however as Tokyo stocks pulled out of the red following a report by the Nikkei newspaper that Japan's government is considering compiling a 3 trillion yen ($24.77 billion) extra budget in preparation for the trans-Pacific trade pact.
The safe-haven yen often moves in inverse correlation with Japanese stocks, falling when investor risk appetite improves.
All the same, the dollar was capped by caution ahead of BOJ Governor Haruhiko Kuroda's press conference at 0630 GMT when he is set to elaborate on the central bank's decision.
The Japanese central bank appeared confident that a tight job market will lift wages and consumption sufficiently to push inflation towards its 2 percent target.
"The reaction by dollar/yen to the BOJ decision was smaller than I expected. While the view among economists may have been split down the middle regarding what the BOJ would do today, market players seemed to have mostly priced in the possibility of no easing," said Masafumi Yamamoto, a senior strategist at Monex in Tokyo.
"There is still the Japanese GDP to be released in November, and those who still think the BOJ will ease later this year have a chance to build their case after first gauging the data," he said.
Friday's BOJ decision had drawn more attention than usual after a run of downbeat Japanese indicators had fanned expectations that the central bank could further expand stimulus.
"I think today's decision was appropriate and came as I expected. The biggest factor is that the U.S. Fed stood pat this month but has left open the possibility of a rate hike in December. The BOJ will probably wait to see whether the Fed may move in December, before deciding to ease further," said Hiromichi Shirakawa, chief economist at Credit Suisse (VX:CSGN) Securities in Japan.
The euro was steady at $1.0981 EUR= after gaining about 0.5 percent overnight on an unexpected improvement in euro zone economic sentiment and signs of faster-than-expected inflation in Germany.
The data helped the common currency bounce from a 2-1/2-month low of $1.0896 struck midweek following the Federal Reserve's hawkish stance.
The Australian dollar nudged up on bargain hunting but remained shaky after taking hits earlier in the week on the back of the Fed's statement and rising risks of a rate cut at home.
The Aussie was up 0.3 percent at $0.7097 AUD=D4 but remained within an arm's length of a 3-week low of $0.7067. ($1 = 121.1200 yen)