* Dollar/yen touches 6-week high, back at pre-Brexit vote levels
* Japan preparing stimulus of at least 20 trillion yen -reports
* Contrasts with revival of U.S. rate hike expectations
* Euro inches higher before ECB meeting
* Kiwi slides after RBNZ flags interest rate cut (New throughout after start of European trade)
By Patrick Graham
LONDON, July 21 (Reuters) - The dollar touched a six-week high against the yen on Thursday, bolstered by reports of a doubling of initial expectations for economic stimulus from Tokyo and bets that the Bank of Japan (BOJ) will ease policy next week.
After sinking briefly below $1.10 on Wednesday, the euro recovered to trade around a quarter of a percent higher on the run-in to an ECB meeting that currency markets seem confident will deliver no great new easing to weaken the currency.
In broader terms, the dollar is trading around its strongest since March against a basket of currencies, driven in the past week by a reheating of expectations for another rise in U.S. interest rates before the end of the year.
With the euro moored to a range of around $1.10-$1.12, that has chiefly been playing out in the dollar-yen exchange rate.
"The market expects something in easing from the BOJ next week, so that is weighing on the yen," said Dominic Bunning, a currency strategist with HSBC in London.
"Fed pricing has also shifted quite a bit, from a 10 percent chance for a rise this year after the Brexit vote to nearly 50 percent. So in terms of dollar-yen you've got that sort of double whammy for the yen."
A broad recovery in risk appetite and speculation about M&A-related flows have also weighed on the yen since investors fled to the traditional security of Japan after Britain's vote last month to leave the European Union. in Japanese equities, which were supported by media reports that the Japanese government was planning to compile a stimulus package of at least 20 trillion yen, dragged on the yen. dollar rose as high as 107.49 yen JPY= , its strongest level since June 7, and last changed hands at 106.82 yen, up 0.1 percent on the day.
The dollar's advance took a pause ahead of chart resistance at around 107.72 yen, the top of the cloud on the daily Ichimoku chart, a popular technical analysis tool.
"Our own view is that the market may still be too optimistic in expectations for bolder measures from BOJ," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ in London.
"If you look at the breakdown of the fiscal package that has been speculated overnight, the headline figure is obviously very large but the actual amount of fresh fiscal stimulus thru government spending is more modest."
The euro rose 0.1 percent against the yen EURJPY=R to 117.90 yen. Against the dollar, the euro EUR= gained 0.2 percent to $1.1030.
The European Central Bank is seen standing pat at its policy meeting later on Thursday, but the market does expect some hint of future monetary policy easing, forecast to come as early as September.
The biggest faller among a relatively subdued set of moves for major currencies was the New Zealand dollar, down 0.6 percent to $0.6986 NZD=D3 , having touched a six-week low of $0.6952.
The Reserve Bank of New Zealand, as expected by many in markets, used an unusual between-meeting update on policy to say further cuts in interest rates are likely. That cemented expectations for easing at its Aug. 11 meeting.