(Adds fresh quote, G7 details, updates prices)
* Yen pulls away from Monday's lows
* Market subdued, awaiting Fed, BOJ decisions
* Sterling at 10-week highs as Brexit jitters ease
By Anirban Nag
LONDON, April 26 (Reuters) - The yen rose on Tuesday, moving away from lows of several weeks against the dollar and euro as prospects of further monetary stimulus this week from the Bank of Japan remained unclear.
With policy decisions from the Federal Reserve and the BOJ due within hours of each other, many investors are likely to stay on the sidelines. The Fed, which is expected to leave interest rates unchanged, will announce its decision on Wednesday while the BOJ concludes its two-day meeting on Thursday.
Speculation of further easing by the BOJ sent the yen lower last week, but it staged a recovery on Tuesday. The dollar fell 0.3 percent to 110.85 yen JPY= , retreating from a three-week high of 111.90 hit the previous day. The euro fetched 125 yen EURJPY=R , down 0.2 percent and off Monday's three-week peak of 125.525.
The yen lost 2.1 percent in value against the dollar on Friday - its biggest one-day fall since BOJ Governor Haruhiko Kuroda announced a second round of monetary easing in October 2014. The trigger was a Bloomberg report that said the BOJ was considering applying negative rates to its lending programme for financial institutions.
A policy decision will be a close call. ID:nL3N17S1KS
"The yen lost a lot of ground on Friday, so there is some speculative unwinding of positions ahead of the BOJ meeting," said Yujiro Goto, currency strategist at Nomura.
"With dollar/yen above 110 yen and the Japanese stock market stabilising, there is a chance that the BOJ may hold back and disappoint those anticipating aggressive easing."
The BOJ introduced negative rates earlier this year, charging commercial banks 0.1 percent interest on a small portion of their reserves. It has run a quantitative and qualitative easing (QQE) programme since April 2013.
These measures have so far failed to generate the inflationary pressures needed to reach the central bank's 2 percent inflation target by the first half of fiscal 2017, fuelling expectations that the BOJ may ease again.
"We believe extra QQE is priced to some extent," said Daiju Aoki, Japan economist at UBS. "Inaction at the April meeting without strong assurances of further easing could be interpreted by the market as a confirmation that the BOJ has de-prioritised the exchange rate ahead of the G7 summit in May."
Prime Minister Shinzo Abe chairs the G7 meeting and Japan wants to avoid criticism that it is waging a global currency devaluation war by resorting to additional stimulus.
Meanwhile, sterling rose to 10-week highs as prospects of Britain leaving the EU ebbed. The pound rose to $1.4579 GBP=D4 , while the euro edged down 0.5 percent to 77.44 pence EURGBP= . GBP/
(additional reporting by Lisa Twaronite; editing by Richard Balmforth)