(Reuters) - Stocks and metals rose on Wednesday while the dollar and Japanese bond yields fell after monetary easing moves by the Bank of Japan spurred expectations of a new round of central bank action to boost feeble economies. European shares extended a rally that began after the BOJ's move on Tuesday, with the pan-European FTSEurofirst 300 .FTEU3 up 0.4 percent on early trade and benchmark indexes in Britain .FTSE, France .FCHI and Germany .GDAXI rising 0.5 percent. The unexpectedly bold action by the BOJ -- which cut interest rates close to zero and said it would pump cash into the financial system through asset purchases -- was seen as the first salvo in a reflationary splurge by policymakers in Japan, the United States and Britain. Global markets are now preoccupied with the likelihood that the Federal Reserve will make a new sortie into "quantitative easing" -- effectively printing money to buy assets -- next month, an expectation that pushed the dollar down broadly. Chicago Fed President Charles Evans was the latest senior official to give credence to that view, when he was quoted by the Wall Street Journal as saying the central bank should do "much more" to stimulate the sluggish recovery. "It's really going to be a struggle between Fed easing and BOJ easing, and whoever wins that contest is going to dictate the direction of dollar/yen," said Gareth Berry, a currency strategist at UBS in Singapore. The weakening dollar drove traditional safe haven gold to the latest in a series of record highs and silver to a 30-year peak, while hopes that monetary stimulus will boost industrial demand sent tin to a record and copper to its highest level in more than two years. But ultra-low interest rates and monetary easing in the rich world has ignited fears of "beggar-thy-neighbor" currency wars, with International Monetary Fund chief Dominique Strauss-Kahn warning that countries risk undermining the global recovery if they use their currencies to try and boost domestic growth. "There is clearly the idea beginning to circulate that currencies can be used as a policy weapon," Strauss-Kahn said in comments published in the Financial Times on Wednesday. STRONG YEN The BOJ's decision to buy a broad range of assets, including real estate investment trusts and exchange traded funds, lifted the Nikkei share average .N225 1.8 percent to a 2-month closing high, although some players remained wary of the strong yen. .T "The most important focus seems to have been aimed at currencies but the yen hasn't weakened against the dollar, and that's keeping a lid on further stock gains," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management Co. "Rather, the yen is staying on the strong side due to expectations that the U.S. Federal Reserve might announce a larger-scale easing." Hopes of further stimulus from the Fed pushed U.S. stocks to a near 5-month high on Tuesday, with the S&P 500 .SPX up 2.1 percent, and the exuberance continued in Asia. .N MSCI's broadest index of Asia Pacific shares outside Japan .MIAPJ0000PUS rose 1.6 percent to a 2-year high, led by the materials and energy sectors .MIAPJMT00PUS .MIAPJEN00PUS.

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