TOKYO, Feb 28 The yen held near 10-week highs against the dollar on Wednesday after loggi

TOKYO, Feb 28 (Reuters) The yen held near 10-week highs against the dollar on Wednesday after logging its biggest daily jump in a year the previous session as investors unwound risky trades on fears of rising volatility in financial markets.

A tumble in global stock prices including the biggest daily fall in Chinese stocks prices in a decade, soft U.S. economic data and growing tensions with Iran jolted investors from complacency and prompted them to cut exposure to risk.

''There was a sharp decline in equities markets such as in China.... For speculators, when things fall into minus this tends to have a big impact on other positions as well,'' said Shuichi Kanehira, senior vice president at Mizuho Corporate Bank.

The yen felt the brunt of the impact and rallied across the board, given the popularity of carry trades in which investors had sold yen to invest in higher-yielding currencies.

''To put it simply, it was position adjustment of an intense nature,'' Kanehira said.

The dollar stood at 118.11 yen as of 2338 GMT after falling to as low as 117.50 yen on electronic trading platform EBS on Tuesday, the lowest level since Dec. 15.

The yen rallied more than 2 percent against the dollar on Tuesday, its biggest daily jump in a year.

The yen also jumped against the euro, sterling, Australian dollar and New Zealand dollar.

The euro stood at 156.30 yen up slightly from around 156.20 yen in late U.S. trading on Tuesday.

Against the dollar, the euro was slightly lower at $1.3230 but still near a two-month high of $1.3260 hit on Tuesday.

Demand for the yen accelerated on Tuesday after a report showed an unexpectedly sharp drop in U.S. durable goods orders in January, adding to speculation the Federal Reserve may cut interest rates later this year to prop up a slowing economy.

A key Wall Street fear gauge had the biggest jump in its 17-year history on Tuesday. The Chicago Board Options Exchange Volatility Index, or VIX, which measures anticipated stock market volatility, shot up more than 70 percent before closing up 64 percent.

REUTERS SBA RN0524