FOREX-Yen, dollar jump on Dubai woes; Japan warns on FX

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

* Pro-risk trades unwound on concerns about Dubai debt

* Japan finmin raises prospect of G7 joint statement on FX

* But FX and other assets steady, recover some ground

(Updates prices, adds quotes)

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.

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-morning London trading. European stocks were flat on the day, having fallen at the open .FTEU3 on easing concerns over European banks' exposure to Dubai's debt crisis.

French banks said they had limited exposure to the debt crisis 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]

"FX markets are nervous as Dubai debt contagion fears fuelled a flight to quality bid, which favoured the dollar. The yen benefited via the crosses, but FX intervention risk rose significantly overnight," said Russell Bloom, analyst at Action Economics in London.

"But early liquidation of speculative positions has been absorbed by those placing their faith in BoJ action," he said.

The dollar fell as far as 84.82 yen JPY=, its weakest since 1995 and ever closer to its record low of 79.75, before pulling back up to 86.80 yen at 1045 GMT, up 0.4 percent on the day.