A volatile global currency market saw the yen slide sharply against the euro and the dollar on Wednesday before bounding back against both in early Thursday trading.

Against the dollar, the Japanese currency rose to 115.52 on Thursday morning, up from 116.17 in late New York  trading yesterday.

Meanwhile, the yen reversed a sharp Wednesday drop to 158.89 by rising to 157.54 this morning.

The uncertainty on the currency markets is the result of fallout from the US subprime lending situation, described as a "meltdown" by Reuters.

Currency economist Masafumi Yamamoto told the news agency: "The market is nervous and interest rate markets are in a crisis mode."

He added: "It's very volatile and difficult to predict even day-to-day movements."

Several European and Australasian lending institutions have been hit particularly hard by the subprime fallout.

In the UK, the co-head of RBS Greenwich Capital's collateralized debt obligations and six other colleagues have quit their posts, the Times reports.