By Wanfeng Zhou NEW YORK, Oct 9 (Reuters) - The U.S. dollar rose sharply against the yen on Thursday as some calm returned to financial markets a day after coordinated global interest-rate cuts, triggering a temporary bounce in risk appetite. As extreme risk aversion receded, the low-yielding, safe-haven yen fell from a three-year high against the euro and a six-month peak versus the dollar hit in the previous session. High-yielding currencies such as the Australian and New Zealand dollars shot higher after tumbling in the previous session. "The stocks overnight had a bit of a rally...and that's given the dollar/yen a little of a boost," said Steven Butler, director of FX trading at Scotia capital in Toronto. "When you start getting down below 100 dollar/yen, people are little bit cautious about getting too far extended long yen at those levels." In early trading in New York, the dollar was up 2.1 percent at 101.37 yen after hitting a session high of 101.47, according to Reuters data. The euro was up 2.3 percent at 138.35 yen But analysts cautioned the situation remained tenuous as investors waited for signs that governments could take further steps to stabilize the global banking system, with the focus shifting to a meeting of Group of Seven (G7) finance ministers and central bankers on Friday. "The market is trying to feel better today, but it's a struggle to have a whole lot of confidence. I'd love to see credit markets ease a bit, but lending remains tight, so I'm not too comforted," Butler said. "For now, I expect people to remain very cautious, the markets remain very jittery and volatility is going to remain very high," he added. The euro also regained some ground against the dollar , rising 0.4 percent to $1.3689. The high-yielding Australian dollar was up 7.2 percent against the U.S. dollar at US$0.7111, after hitting a five year low on Wednesday. The New Zealand dollar rose 3.5 percent to US$0.6214 . Against the yen, the Aussie dollar rose 7.6 percent to 71.43 and the kiwi was up 4.4 percent at 62.5 . NEXT RISK EVENT: G7 Markets are looking to the G7 meeting, as well as a broader meeting of G20 countries over the weekend, for a more coordinated approach to the global financial crisis. U.S. Treasury Secretary Henry Paulson suggested on Wednesday the United States may follow in Britain's footsteps and inject capital into banks to strengthen their balance sheets. But a British proposal to provide guarantees on interbank lending may meet resistance. "What is needed is a coordinated plan, they need to agree on a broad set of principles," said Adarsh Sinha, currency strategist at Barclays Capital in London. "If they can show that, then it will be a positive, but if they fail, we will see more of the turmoil." Markets also expect central banks around the world to cut rates further after the Fed, the ECB and the central banks of Canada, England, China, Sweden and Switzerland cut rates simultaneously on Wednesday. "Having embarked on this easing cycle, all of the central banks will find it difficult to pull back now," said Calyon strategists in a research note. Markets will also keep an eye on further measures by central banks to revive frozen money markets. (Additional reporting by Steven C Johnson in New York and Tamawa Kadoya in London, Editing by Chizu Nomiyama)

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