(Adds fresh quotes)
* Sterling strong near 4-1/2-year high vs dollar
* Trading winds down ahead of Easter holidays
* Yellen stresses need for interest rates to stay low
LONDON, April 17 (Reuters) - The dollar fell against a basket of currencies on Thursday after Federal Reserve Chair Janet Yellen reiterated an accommodative monetary policy stance in comments.
Dollar weakness saw the pound at its highest level against the U.S. currency since late 2009 as investors continued to price in expectations for a UK rate hike in the first quarter of next year after strong jobs and wages data on Wednesday.
Sterling's trade-weighted index hit a 5-1/2-year high in the European session, up 1.8 percent on the year.
In her second public speech as Federal Reserve Chair, Yellen stressed the need for accommodative policy, citing persistently low inflation and economic slack.
Her dovish remarks offset data suggesting that the U.S. economy was regaining momentum. U.S. industrial production rose at a faster-than-expected clip in March, while the Fed's Beige Book report showed economic activity picked up in recent weeks.
The dollar index eased 0.2 percent to 79.613, dragged down by lower U.S. yields, while the euro was up 0.2 percent at $1.3860. Sterling was up 0.1 percent at $1.6820, having hit its highest since late 2009 at $1.6842 .
The dollar down 0.2 percent at 102.03 yen.
"Yellen's comments have hurt the dollar as she has indicated that the Fed is in no hurry to raise rates," Societe Generale currency strategist Alvin Tan said.
"With U.S. yields at the bottom of their recent range we expect the dollar to remain soft. Only when yields pick up and the market focuses on rate hikes by the Fed will the dollar start to rally. That we expect sometime in the third quarter of this year."
Volumes are expected to fizzle out later in the day with Easter holidays in sight. Markets in Tokyo will be open but banks in London, which has the biggest share of daily turnover, will be closed on Friday and Monday.
Nevertheless, according to data from Reuters Matching, trading in dollar/yen was well above its one-month average.
Some investors apparently used comments by Bank of Japan Governor Haruhiko Kuroda as an excuse to buy back yen, even though his remarks contained nothing new, Ayako Sera, senior market economist at Sumitomo Mitsui Trust Bank said.
The central bank chief said the BoJ would adjust monetary policy when needed but said nothing to indicate that more easing steps would be forthcoming any time soon.
"There is potential for another leg lower in the correction witnessed since the beginning of the year, in our view. We look to sell rebounds towards the 102.50 yen area, with a move below 101.50 yen triggering a renewed bearish signal for dollar/yen," Morgan Stanley analysts said in a note.
The euro, though, rose against the yen to 141.50 and edged up against the dollar with some of its gains linked to demand for an Italian bond from overseas investors, traders said.
(Additional reporting by Lisa Twaronite; Editing by Louise Ireland)