* Expectations of measured ECB message underpin euro
* Volatility up, however, as some hedge bets on more easing
* Dollar/yen back above 117 after sliding to 115.97 overnight
* Rebound in crude oil and equities help dollar recover
* Market tone still shaky after stocks sell off (Updates after ECB keeps rates steady)
By Patrick Graham
LONDON, Jan 21 (Reuters) - Expectations of a steady-as-she-goes message from the European Central Bank in the face of financial market turbulence kept the euro strong against the dollar before the bank's post-statement news conference on Thursday.
With European stock markets recovering and oil prices stabilising after a dizzying sell-off on Wednesday, the safe- haven yen retreated from overnight highs against the dollar. JPY=EBS
Major currencies tied to China, oil and global risk-taking all still looked shaky. Sterling - down 10 percent since early December - fell another half a percent to a seven-year low of $1.4096. GBP=D4
Others, however, were all off Wednesday's lows. Traders said lack of action by the Brazilian and Canadian central banks - many had expected policy moves by both - had calmed currency markets before the ECB meeting.
"These central banks are well aware that they can't be too downbeat when talking about growth and inflation expectations," said Richard Benson, co-head of portfolio management at currency fund Millennium in London. "The ECB is not going to ease. I suspect it will remind the market of the moves it made in December and leave it at that."
That said, a jump in euro implied volatility - derivatives allowing traders to cover themselves against, or bet on, sharp moves - have jumped to around 20 percent in the last 24 hours. After the bank as expected kept interest rates on hold, all eyes were on ECB chief Mario Draghi's news conference at 1330 GMT.
Many speculative investors were hurt by the bank's stopping short of more aggressive easing moves in December, leaving more doubt in many minds.
"After the December meeting, Draghi has made himself an unpredictable integer," said Mark Farrington, managing director of $7.7 billion hedge-fund style currency managers Macro Currency Fund in London.
"When he did act then he always aimed to surprise the market and over-deliver. The December meeting was a break in the sequence of his behaviour and that has made it impossible for people to have that level of confidence that they had before."
"My own approach is to wait and listen, to see how they're going to modify the message from here."
The euro was up 0.1 percent at $1.0905 EUR= in morning trade in Europe, down from Wednesday's highs of $1.0976 and virtually unchanged from levels seen immediately after the ECB's last meeting in December.
Analysts assume that keeping the euro weak is a central plank of Draghi's efforts to refloat the euro zone economy and get inflation moving back towards its target of below or close to 2 percent.
But they are far less sure of how much more currency weakness Draghi and colleagues would like from here: market forecasts on euro-dollar rates are now widely split after a year when most only pointed down. FXPOLLS
The dollar had recovered to 117.06 yen JPY= , having descended to 115.97 yen overnight, its lowest since January 2015. A report by Bloomberg quoting an unidentified Tokyo official that authorities were "closely watching the currency markets" lifted the greenback, traders in Asia said. (Editing by Larry King)