The yen rose modestly Thursday, recovering from the previous day's sharp decline, as investors continued a longer-term trend of reducing risky bets in response to troubled credit markets.
However, the yen and U.S. stocks remained closely linked, and a rally in major equity indexes led the Japanese currency to cut its gains against the euro and dollar.
The euro was down from late Wednesday against the yen, but well off session lows of 156.80 yen. The cross has swung between 159.00 yen and 154.50 yen over the past two days, mostly in response to moves in stocks.
The dollar briefly pared losses and crept up to 116.00 yen, but then settled back to trade lower against the Japanese currency.
The euro was trading lower versus the greenback, dragged down by the euro's losses against the yen.
The fall in the single European currency came just a day after it posted its biggest one-day rise versus the yen since March 2004 as a surge in Wall Street shares helped relieve some of the fears about a worsening credit squeeze that had originated in the U.S. mortgage market for risky borrowers.