FINANCIAL MARKETS : Dollar Bounces Back in Tokyo Sessions : Trading: With U.S. exchanges shut down for the holiday, activity overseas is subdued.

The dollar climbed back above 99 yen early today in Tokyo, recovering from a record low on Monday and inspiring a morning rally in Japanese stocks.

Trading worldwide on Monday was becalmed by the Independence Day holiday in the United States.

In between Tokyo trading sessions, the greenback rose slightly against European currencies.

With U.S. financial markets closed for the holiday, international attention was turned toward a string of key financial meetings this week--the U.S. Federal Open Market Committee, the German central bank’s policy-making council and the Group of Seven summit in Naples, Italy.

Foreign stocks were generally higher and gold prices rose. In Tokyo, the 225-issue Nikkei average gained back most of its Friday loss, adding 88.52 points, or 0.43%, to close at 20,631.93 on Monday. It continued its advance this morning, moving above 20,800.

“The market was up (Monday) because there was no new bad news,” said Jonathan Davis, broker at Barclays de Zoete Wedd Securities in Japan.

The dollar had closed Monday at 98.67 yen in Tokyo, down from Friday’s 98.78 close.

“The (G-7) summit is a political carnival and you can’t really expect much support for the greenback to come from it,” said Kaoru Ichikawa, a broker at Kokusai Securities.

The dollar has been sliding against the yen over the last few weeks because of confusion about U.S. policy to support the greenback, concerns about U.S.-Japan trade negotiations and bearish speculators.

The dollar has also fallen because traders expect U.S. interest rates to rise. Higher rates erode the value of U.S. bonds and cause foreign investors to look elsewhere.

But despite the dollar’s troubles, many economists believe policy-makers at the Federal Reserve will not raise interest rates this week to defend the greenback, deciding instead to put the domestic economy ahead of global currency concerns. The Fed’s policy-making group meets behind closed doors today and Wednesday.

This view, however, is not universal. There are some analysts who think the Fed will boost rates to shore up the dollar.

The Fed has already pushed short-term interest rates up three times this year.

Meanwhile, Japan’s trade surplus dipped 6.7% in May, as the country used its strong currency to import more goods, the Finance Ministry said Monday.