* Demand for yen softens as Wall St finds a floor
* Sterling broadly firmer as euro stays on defensive
* Speeches by ECB's Coeure and Fed's Yellen next in focus (Adds details, quotes)
By Ian Chua and Shinichi Saoshiro
SYDNEY/TOKYO, Oct 17 (Reuters) - The yen was off its recent highs on Friday after another choppy session overnight where some calm returned to Wall Street thanks to encouraging U.S. data that helped take the edge off global growth jitters.
Also aiding risk sentiment, the head of the St. Louis Federal Reserve Bank, James Bullard, said the U.S. central bank may want to keep up its bond buying stimulus for now given a drop in inflation expectations.
His comments came after data showed the number of Americans filing new claims for jobless benefits fell to a 14-year low last week and industrial output rose sharply in September.
All that helped U.S. stocks eke out the smallest of gains, and soften demand for the safe-haven Japanese currency. As a result, the dollar climbed 0.4 percent to 106.36 yen , pulling away from a five-week low of 105.19 plumbed on Wednesday.
"Wall Street halting its slide has helped the dollar for now, but it's difficult to say whether risk aversion has gone away. I see it more as a natural rebound by the dollar," said a trader at a large Japanese bank in Tokyo.
"The dollar fell so much against the yen that it was bound to bounce some time. However, Treasury yields are still so low that any rise by the dollar is likely to face resistance and peter out," he said.
After steadying Wall Street tempered rallying bonds overnight, the two-year Treasury yield was a shade higher at 0.347 percent, edging away from a 17-month low of 0.244 percent hit mid-week.
The yield, which offered almost 0.60 percent at the start of this month, was still on track for a 10 basis point drop on the week.
The euro rebounded to 136.09 yen from an 11-month low of 134.15, while the Australian dollar climbed to 93.32 yen from a seven-month trough of 91.72.
"It was largely a cool-down session, spiced up by solid U.S. data and a surprisingly dovish comment from Fed member Bullard," analysts at CitiFx wrote in a note to clients.
Sentiment for the euro, however, remained fragile following yet another selloff in peripheral euro zone bonds overnight and a disappointing auction of Spanish debt.
Borrowing costs for some of the bloc's most highly indebted southern states shot higher for a third session as confidence that the European Central Bank could avert another debt crisis in the bloc appeared to have waned.
Data on Thursday showed deflation in Greece, Spain, Italy, Slovenia and Slovakia and the overall euro zone inflation stuck in the ECB's 'danger zone' for a 12th month.