* Yen sinks on helicopter money speculation
* BoE expected to cut rates to blunt Brexit impact
* Kiwi also hit by speculation of early rate cut
By Patrick Graham
LONDON, July 14 (Reuters) - The yen sank across the board on Thursday as the upbeat mood on global stock markets stretched into a sixth day and media reports stoked speculation the Bank of Japan could take steps to fund government spending directly.
Sterling made solid gains against the yen, the dollar and the euro ahead of a Bank of England meeting widely expected to cut interest rates in aid of offsetting the blow to the economy of last month's vote to leave the European Union.
The New Zealand dollar also fell after central bankers there said they would issue an economic update before next month's policy meeting - an unusual step read by some as a sign the Reserve Bank was preparing to cut rates.
But it was the yen's moves that grabbed the most attention, sliding past 105 per dollar, with dealers citing a Bloomberg report saying ex-Federal Reserve chief Ben Bernanke had raised the prospect of the BoJ issuing "perpetual bonds".
"We had this big move up at 7.30 this morning on the story about Bernanke floating this idea. It pushed the dollar through 105 yen and caught some stops along the way," said Alvin Tan, a strategist with Societe Generale in London.
"We've heard a lot of talk about fiscal policy out of Japan. Something will happen on that front. The big question is whether there will be further monetary easing and coordination of the two. That does seem possible."
The dollar gained 1 percent to 105.54 yen, hitting its highest level since late June.
If the government issued perpetual bonds directly to the BOJ, it could amount to the Bank funding government spending directly by printing new yen, for the first time shooting "helicopter money" directly at businesses and consumers.
Another of Prime Minister Shinzo Abe's advisers poured cold water on the idea in an interview with Reuters published after the Bloomberg story.
But with Abenomics widely considered to have failed so far, traders are wondering if the government and BOJ will come up with more radical monetary and fiscal stimulus measures soon.
That plays in to a broader world environment where central banks are again thinking more about stimulus than hopes the economy will prove strong enough to finally begin to put an end to the era of ultra-low interest rates and money-printing.
Speculation is rife that the Bank of England could also head for a new round of quantitative easing within months. That should add up to a weaker pound, although SocGen's Tan argued that the prospect of longer-term support for growth was offering sterling some support.