UPDATE 1-Govt urged BOJ to ensure smooth funding -minutes

* Govt official said expects BOJ to support economy

* Board decided to spend more time examining fund conditions

TOKYO, Nov 5 - A government representative said he hoped the Bank of Japan would facilitate the smooth flow of corporate funds at the bank's rate review on Oct. 13-14, when the board deferred a decision on withdrawing from credit markets.

While stressing that the government respects the BOJ's independence, the representative said he expected the central bank to support the economy with easy monetary policy, minutes of the meeting showed on Thursday.

"We hope the BOJ takes appropriate action by carefully examining market developments so that flows of corporate funding won't be clogged up, as the business environment and funding conditions remain severe," the government representative was quoted as saying.

At the meeting, the BOJ put off a decision on whether to end measures to support corporate finance in December after the government pressed it to consider the economic cost of its retreat from credit markets.

While the board members agreed that the role of the bank's unconventional measures had declined, they decided to spend more time examining fund transactions maturing beyond the calendar and fiscal year-end in March, the minutes showed.

Markets had expected the central bank to end at least some measures at the two-day meeting, such as its purchases of commercial paper and corporate bonds, as BOJ officials had said they were no longer needed with credit markets on the mend.

At a subsequent meeting last week the BOJ decided to begin withdrawing from credit markets although it extended a loan scheme by three months.]

In the run-up to both meetings, the government had pressed the BOJ to continue its corporate debt buying and other measures.

Two government representatives, one from the Ministry of Finance and another from the Cabinet Office, can sit in on board meetings and request delays in policy decisions, although they cannot vote.

The only time the government requested such a delay was in August 2000 when it wanted to stall a rate hike. The BOJ turned it down and raised interest rates to 0.25 percent, only to cut them to zero eight months later as the economy crumbled.

The BOJ was granted independent control of monetary policy in 1998, but politicians still wield some influence over monetary policy.