TOKYO, May 6 (Reuters) - A Japanese ruling party panel called on the government and the Bank of Japan on Thursday to make utmost efforts to keep the yen at appropriate levels as part of efforts to pull the world's No.2 economy out of deflation.

It also urged the central bank to set an inflation target and take other bold steps to end price falls.

The panel did not mention a specific yen level, though another group of mostly junior party lawmakers has urged the government to target a dollar/yen rate of around 120 yen and inflation of 2 percent. [ID:nSGE63M0FX]

Efforts must be made through monetary policy and other means to keep currencies at appropriate levels so as not to distort trade and financial markets, while gaining understanding from the international community, the panel said in a draft report.

Japan should implement and continue drastic monetary easing until it ends a deflationary situation and asset deflation including stock and real estate, and carry out necessary institutional reforms, the sub-committee said in the report.

The yen was around 93.40 yen to the dollar on Thursday. Japan's core consumer prices fell 1.2 percent in the year to the end of March, marking 13 straight months of annual falls.

The panel is among the three sub-committees of a Democratic Party committee tasked with drafting the party's campaign platform for an upper house election expected in July.

The committee, which consists of senior party members and cabinet ministers, will meet on Monday to discuss whether to incorporate the panel's proposals in the campaign platform.

The platform will be finalised by the end of May. (Editing by Michael Watson)

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