The dollar came under fresh pressure against the yen, easing towards recent 15-year lows on growing speculation that Japanese authorities are unlikely to intervene to counter their currency's recent strong run.

The euro cut losses against the dollar, while sterling rebounded as investors reversed short positions after the release of minutes from the Bank of England's last policy meeting.

Dollar/yen is headed towards the 85 yen level and there is little that can be done to prevent that, said Kenneth Broux, markets strategist at Lloyds TSB Financial Markets. There is talk the Japanese won't intervene, as yet, and of course Japanese yields are still positive.

By 1030 GMT, the dollar shed 0.3 percent against the yen to 85.28 yen JPY=, not far from a 15-year low of 84.72 yen hit on trading platform EBS last week. Traders cited stops at 85.20 yen which could check the dollar's fall.

The dollar's moves against the yen have recently had a high correlation with U.S.-Japanese government bond yield spreads, which have narrowed as U.S. Treasury yields fell sharply in the past few months.

Japanese authorities seem unlikely to conduct yen-selling intervention unless the currency's rise accelerates sharply, market players say. Speculation about intervention has mounted ahead of a meeting between Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa expected next Monday.

The euro was also weaker against the yen, down 0.2 percent at 109.91 yen EURJPY=R but off the day's low of 109.58 yen. The pair had hit a near seven-week low of 109.07 yen on EBS earlier this week.

The euro was flat against the dollar at $1.2890 EUR=, bouncing from support at around $1.2845 which was the 50 percent retracement of the single currency's fall from its March 17 high of $1.3817 to its four-year low of $1.1876 struck on June 7.

The euro has recovered from this week's low of $1.2732 on robust responses to Irish and Spanish debt auctions, although investors remain cautious about going long on the single currency due to worries about peripheral euro zone economies.

Sovereign debt jitters refuse to die down, said Nick Mellor, currency strategist, at Bank of New York Mellon. Spreads for Greek, Italian and Portuguese debt remain elevated, despite the good responses to Irish and Spanish debt auctions this week. So we should see that impacting the euro.

The 10-year Greek/German government bond yield spread GR10YT=TWEB DE10YT=TWEB remained high at 853 basis points. The equivalent spread on Portuguese bonds PT10YT=TWEB was flat at 284 basis points.

There was little market reaction on Wednesday's sale of Portuguese T-bills at which the yield on three month paper almost halved but that on 12-month debt rose from the previous auctions.

Sterling pared losses and moved to session highs. The pound GBP=D4 was trading at $1.5644, up around 0.4 percent versus the dollar and close to a session high of $1.5673. Traders reported option-related offers at $1.5660/90.

Earlier, sterling had fallen to a three-week low versus the dollar on talk the BoE minutes could reveal a three-way split decision, which would have meant one member voting for an increase in the central bank's quantitative easing programme.

The Canadian dollar was higher against the greenback at C$1.0299 CAD=D4 having surged on Tuesday after BHP Billiton (BLT.L) (BHP.AX) launched an unsolicited $38.6 billion bid for Canada's Potash Corp.

(Editing by John Stonestreet)

Vs