* Yen stabilises after falling on improved risk appetite
* Putin says would use force in Ukraine only as last resort
* China maintains 2014 growth target at 7.5 pct, as expected
By Ian Chua and Masayuki Kitano
SYDNEY/SINGAPORE, March 5 (Reuters) - The yen held steady versus the dollar on Wednesday, nursing heavy losses from the previous day as safety demand faded after Russian President Vladimir Putin played down the prospect of a war in Ukraine.
The dollar held steady at 102.23 yen, after having risen 0.8 percent against the Japanese currency on Tuesday for its biggest one-day gain since mid-January.
The euro held steady at about 140.39 yen, after gaining 0.8 percent on Tuesday.
At his first news conference since the crisis began, Putin said Russia reserved the right to use all options to protect compatriots who were living in "terror" in Ukraine, but that force was not needed for now.
The relief was palpable across global financial markets with European stocks surging and Wall Street's S&P 500 rising to a record closing high on Tuesday. U.S. benchmark Treasury yields moved back sharply from one-month lows.
Market players, however, were still keeping a close watch on developments in Ukraine and geopolitical risk.
"I think there's obviously hesitancy to take bigger positions here," said Mitul Kotecha, Hong Kong-based head of global foreign exchange strategy for Credit Agricole.
"There is still a wait-and-see attitude. There's been some relief, but I don't think the market's convinced that this is a sustained relief. For now, it could be seen as temporary," he added.
The euro eased 0.1 percent to about $1.3732, having retreated from Friday's two-month high around $1.3825.
Investors stayed clear of the euro given the risk that the European Central Bank could loosen monetary policy at Thursday's review.
With euro zone inflation running well below the ECB's target of just under 2 percent, the central bank is under pressure to do more to drag inflation out of a "danger zone" that threatens to stagnate the region's fragile recovery.
The start of China's annual parliament meeting offered no major surprises, and major currencies showed limited reaction.
China announced on Wednesday it would maintain its economic growth target for 2014 at about 7.5 percent, as expected, signalling that its policy focus would be slanted in favour of reforms and rebalancing the economy.
The Australian dollar gained a brief boost after data showed Australia's economic growth had beaten forecasts, reinforcing expectations of a steady interest rate outlook.
Australia's economy grew 0.8 percent last quarter as a surge in resource exports and a pick-up in consumer spending helped offset a sharp pullback in business investment.
The Australian dollar rose as high as $0.8998 a few minutes after the data's release, but later pared its gains and last fetched $0.8954, steady from late U.S. trade on Tuesday.
The Aussie, however, remained above a one-month low of $0.8891 set on Monday, when the tensions in Ukraine dampened broader risk sentiment.