Aug. 21 (Bloomberg) -- The Bank of Japan added extra funds to the financial system today, signaling its cooperation with the Federal Reserve and the European Central Bank to ensure credit remains available amid a U.S. subprime mortgage collapse.

The central bank injected about 800 billion yen ($7 billion) to the banking system at 9:20 a.m. in Tokyo. It's the 17th time the bank has supplied a sum of that amount or more this year and the fourth since Aug. 9, when the ECB added a record 94.8 billion euros ($128 billion) to bring short-term lending rates lower and help avert a crisis of confidence in credit markets.

The U.S. Federal Reserve on Aug. 17 lowered the interest rate it charges banks and highlighted a rising threat to economic growth, suggesting officials may reduce the benchmark borrowing cost next month. The measure helped global stocks rebound. Japan's benchmark Nikkei 225 Stock Average has risen 4.1 percent since Aug. 17, when it dropped 5.4 percent, the most in more than five years.

``The outlook for financial markets remains unclear, even though they've regained some stability,'' said Hiroshi Shiraishi, an economist at Lehman Brothers in Tokyo. ``The Bank of Japan maintains an accommodative stance.''

The yen has weakened from last week's 14-month high since the Fed cut the so-called discount rate. It gained at least 3 percent against all 16 most-active currencies last week as investors fled higher-yielding assets funded by loans in Japan.

Yen, Nikkei

Japan's currency traded at 114.87 per dollar at 3:02 p.m. in Tokyo from 114.88 late yesterday in New York. The Nikkei rose 1.1 percent to 15,901.34 at the close.

The rate for overnight call loans between commercial lenders -- the Bank of Japan's benchmark short-term interest rate -- traded at 0.49 percent, according to Tokyo Tanshi Co., lower than the bank's 0.5 percent target.

The figure compared with the weighted average for overnight call rates of 0.539 percent yesterday, according to the bank.

Japanese Finance Minister Koji Omi said financial markets have calmed down since the U.S. housing-loan problem caused stocks to plummet and the yen to strengthen.

Omi also said he expects the Bank of Japan to consider the recent developments in markets when it holds a regular meeting on Aug. 22-23 to set interest rates. The bank will keep its benchmark rate at 0.5 percent at the meeting, according to 43 of 46 economists surveyed by Bloomberg News.

To contact the reporters on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net; Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

Last Updated: August 21, 2007 02:04 EDT