By Glenn Somerville

WASHINGTON (Reuters) - Japan's decision tosingle-handedly intervene in currency markets to drive down itscurrency's value complicates a U.S. and European bid topersuade export-powerhouse China to let its yuan appreciate.

Amid growing global pressure for Beijing to let its yuanrise in value to help rebalance uneven global trade, analystswarn that Japan's unilateral action risks spurring an era ofbeggar-thy-neighbor policies as countries try to devalue theirway to prosperity.

Already on Wednesday, Colombia's central bank said it wasstarting to buy at least $20 million daily to slow the rise inits peso currency and Brazilian Finance Minister Guido Mantegasaid he was "watching the game" and wouldn't stand by if othersweakened their currencies at Brazil's exporting expense.

In Thailand, business leaders are urging policymakers tokeep the baht's value from rising excessively so that itsindustrial sector doesn't suffer, and analysts see a risk thatThailand and other Asian nations may follow Japan's path.

Tokyo's solo intervention in currency markets was notunexpected. The yen had hit a 15-year high that was a threat toJapan's recovery, and officials in Tokyo had been threateningto intervene for weeks.

U.S. lawmakers, embarking on the first of two days ofhearings into China's currency policies, let their anger showon Wednesday at the two Asian trade giants while ventingfrustration at the difficulty in shrinking trade imbalances.

"China is not the only country with a predatory exchangerate policy," said U.S. House Ways andMeans Committee Chairman Sander Levin, describing Japan'sintervention as "a deeply disturbing development."

"What's happening is that China's actions have affectedJapan, and now Japan's actions affect us," he said.

Displeasure at Tokyo on Capitol Hill was in marked contrastwith the studied quiet from the Obama administration and theU.S. central bank.

The White House and U.S. Treasury declined comment onJapan's intervention, as did the Federal Reserve, possibly asign that Japanese officials had sought their silence duringthe runup to the overnight bout of dollar buying.

The silence was nonetheless telling, effectivelyhighlighting the conundrum that U.S. officials face.

As Andrew Busch, global currency strategist at BMO CapitalMarkets in Chicago, put it: "How can the Japanese get a pass tointervene when the Chinese are being criticized for essentiallythe same activity?"

NOT THE PROPER ROUTE

The closest that U.S. Treasury Secretary Timothy Geithnercame to publicly trying to dissuade Japan from currency actioncame last week when he was asked during a television interviewif the United States would back Japan in any intervention.

"My view is that they should be focusing, as we are, on howto make sure they are reinforcing recovery," he said. "Thatwould be good for us, good for Japan's trading partners."

The timing of Tokyo's action, ahead of gatherings of theInternational Monetary Fund and World Bank in Washington earlyin October and Group of 20 meetings in Korea that conclude witha leaders summit in early November, added to a sense ofdiscomfort.

Those bodies -- and the smaller Group of Seven that willmeet informally on the sidelines of the IMF meeting inWashington -- are the key forums that focus on the need formarket-influenced exchange rates.

When the G7 has sanctioned intervention in the past, it hasgenerally been on a coordinated basis as opposed to unilateralactions, such as Japan's, that might trigger competitivedevaluations.

"Unilateral actions are not the appropriate way to dealwith global imbalances," Eurogroup Chairman Jean-Claude Junckersaid Wednesday when asked about Japan's yen selling.

Desmond Lachman, a fellow at the American EnterpriseInstitute in Washington, said Japanese authorities were rightlyconcerned at the huge appreciation the yen has seen in the pastyear as its popularity as a 'safe haven' currency soared.

The yen's rise was in part a play by global investors onthe low level of interest rates in the United States and thepossibility that the United States. and Europe might have toease monetary policy further if recovery falters.

The Fed's policysetting committee meets next Tuesday. Whileit is not expected to announce new easing measures, it willdebate what can and should be done to try to speed up a wanrecovery that is not creating jobs at a pace sufficient tolower unemployment. (additional reporting by Paul Eckert, Doug Palmer and EmilyKaiser)