FOREX-Yen, dollar jump on Dubai woes, but mkts calmer

* Yen hits 14-year high on dollar, through 85 yen

* Pro-risk trades unwound on concerns about Dubai debt

* But FX and other markets steady, recover some ground

* Japan finmin raises prospect of G7 joint statement on FX

(Updates prices, adds quote)

By Jamie McGeever

LONDON, Nov 27 (Reuters) - The yen hit a 14-year high versus the dollar and rallied broadly on Friday, while the dollar jumped against most other currencies as investors cut carry trades and risk exposure on concern about Dubai's debt problems.

By mid-session in London, however, exchange rates had recovered some ground and were trading in narrower ranges, while volatility had eased.

Earlier, Japan signalled growing discomfort with the yen's surge -- it briefly broke the 85 yen per dollar level -- and suggested it would be open to a Group of Seven joint statement on currencies to cool the rally.

Market sources said the Bank of Japan checked exchange rates earlier in Asian trading with Japanese commercial banks, raising fears of outright intervention, although analysts say this is unlikely right now.

But the speed and scale of dollar/yen's fall was such that a recovery was always likely, particularly after Japan's Finance Minister Hirohisa Fujii said the moves were "extreme" and it was possible Japan could respond.

The sharp declines in other markets were also reversed or pared back by mid-session in London. European banking stocks were up half a percent on the day, having fallen at the open .SX7P.

French banks said they had limited exposure to the Dubai debt crisis and Bank of Italy Director General Fabrizio Saccomanni said Italian banks had "very limited" exposure.

Dubai struggled to ease fears of debt default on Thursday after its move to delay repayments at two flagship firms shook confidence in the Middle East and raised the prospect of further huge debt write-offs for banks. [ID:nGEE5AO2FN]

"The market is taking a breather. Volatility had soared in early hours after the risk trade headed for the exits in thinned liquidity," said Jane Foley, chief strategist at FOREX.com.