* 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
* Stocks slide; Nikkei -3 percent, Wall St seen opening -3 percent
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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 slashed risk exposure and carry trades on concerns 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 was checking exchange rates earlier in Asian trading with Japanese commercial banks, raising fears of outright intervention, although analysts say this is unlikely right now.
Implied volatilities on dollar/yen and euro/dollar currency options jumped to their highest in several months as traders sought protection against sharp swings in these exchange rates.
The widespread slashing of dollar-funded carry trades pushed the euro down more than 1 percent against the greenback, and the Australian and New Zealand dollars down almost two percent.
Other assets were also hit: Japanese stocks fell 3.2 percent , U.S. stock futures showed Wall Street opening down 3 percent, oil shed 7 percent, and gold and silver lost 4 and 5 percent, respectively.
"This story has seen a dollar recovery," said Michael Hewson, analyst at CMC Markets in London.
On the yen, he said: "The concern now is that Japan will intervene to prop up the dollar as it heads towards its all-time lows against the Japanese currency."
The dollar fell as far as 84.82 yen, its weakest since 1995 and ever closer to its record low of 79.75, before pulling back up to 86.25 yen, still down 0.3 percent on the day.
The dollar index, a measure of its value against six major currencies, rose 1 percent on to 75.575, and the euro slid as low as $1.4830. That was more then three cents down from a 15-month high of $1.5144 reached on Wednesday, just before markets were first spooked about Dubai's ability to refinance its debt.
At 0815 GMT the euro was down one percent on the day at $1.4850.
FRAGILE MARKETS
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.
"A combination of systemic risk fears and thin market liquidity due to the U.S. holiday season has proven to be a combustible mix and several currencies or currency blocs are feeling the impact," UBS currency analysts wrote in a note.
"The wider fallout has simply revealed how fragile both markets and risk appetite still are," they said.
Implied volatilities on one-week euro/dollar currency options rose to 13 percent, a high not seen since June and almost doubling from lows reached earlier this week.
One-week implied volatilities on dollar/yen options surged above 18 percent for the first time since April, sharply up from a 2009 low of 5 percent earlier this week.
Japanese Finance Minister Hirohisa Fujii raised the prospect of a G7 joint statement on currencies and said a government response to extreme moves was possible.
While some analysts said the G7, or the bigger G20, could issue a statement to prevent the dollar from weakening further, or Japan could step in alone, others doubted the chance of joint intervention above 80 yen.
Some traders and analysts were sceptical the move was disorderly enough to draw a response from the U.S. or Europe just yet.
Investors will be closely watching U.S. markets when they reopen on Friday after the Thanksgiving holiday on Thursday.
((Reporting by Jamie McGeever; editing by Patrick Graham; Reuters Messaging: jamie.mcgeever.reuters.com@reuters.net; +44 207 542 8510))