* Yen comes under renewed pressure vs dollar and euro
* Expectations of BOJ easing likely to weigh on yen
* Euro steady ahead of Thursday's ECB meeting
By Anirban Nag
LONDON, Jan 9 (Reuters) - The dollar climbed against the yen on Wednesday, moving back towards a recent 2-1/2 year high, as renewed expectations of easier Bank of Japan monetary policy led some investors to sell the Japanese currency.
The dollar rose 0.5 percent on the day to 87.50 yen, lifting off a near one-week low of 86.82 hit earlier in the session. That low marked a loss of about 1.9 percent from last Friday's peak of 88.48 yen.
Traders said the dollar's pullback had lured in investors waiting for a chance to buy on dips, and that speculation the BOJ could deliver further aggressive easing steps at its Jan. 21-22 policy meeting would keep the yen under pressure.
"Flows overnight suggested there was some appetite to pick up the dollar and that encouraged people back into the trade. No one is going to want to be short yen going into the BOJ meeting," said Derek Halpenny, European head of FX research at Bank of Tokyo-Mitsubishi.
Sources familiar with the BOJ's thinking told Reuters the central bank was likely to adopt a 2 percent inflation target at the meeting, double its current goal, and issue a statement with the government pledging bold monetary easing steps.
The BOJ will also consider easing monetary policy again this month, probably through an increase in its 101 trillion yen ($1.2 trillion) asset buying and lending programme, the sources said.
Expectations that Japan's newly elected government led by Premier Shinzo Abe would push the BOJ to adopt more forceful monetary stimulus measures have driven the yen sharply lower in recent months. But the dollar and the euro eased against the yen this week as investors locked in profits after steep gains.
At Friday's peak, the dollar had gained nearly 12 percent against the yen since early November, and traders said the rally was due a pause.
"After a 10-12 percent rise, there is bound to be some consolidation and a shakeout could possibly see dollar drop to 84 yen," said Howard Jones, partner at money manager RMG Wealth Management.
"But any consolidation will be short-lived. From a macro view, with a huge change of policy taking place in Japan and the government determined to drive the yen lower, one must not underestimate them. We are looking at the dollar hitting 100 yen during the course of this year."
On Wednesday, Abe reiterated his call to the BOJ to take sufficient steps to achieve a 2 percent inflation target while Finance Minister Taro Aso called for aggressive measures to beat deflation.
Option traders cited demand for bets the dollar will rise further against the yen in the near term.
Implied volatilities edged up across the board, reflecting demand to hedge against yen losses, with one-month vols rising to 10 percent from 9.5 on Tuesday -- their highest since early April last year.
One-month risk reversals were skewed towards yen puts, trading at 0.5 vols on Wednesday.
The yen's weakness helped the euro, which rose about 0.3 percent to 114.20 yen, but was still some way from an 18-month high of 115.995 yen set on trading platform EBS on Jan. 2.
The euro was slightly lower at $1.3050, easing after German industrial output rose less than forecast in November, although bids from sovereign investors at $1.3040 were likely to check a sharp drop. Chart support was expected near the Jan. 4 low of $1.2998 and from the 55- and 50-day moving averages, also around that level.
Some strategists said expectations the European Central Bank will keep its interest rates on hold on Thursday were also likely to support the euro, although some investors and economists believe rates will be cut later this year.
The dollar index was higher on the day at 80.517 while commodity currencies inched higher.