* European shares edge higher after falls elsewhere
* Lower U.S. yields, BOJ comments push yen higher vs dollar
* Wall St set to open higher, eyes on Fed minutes, Yellen (Updates with fresh prices,)
LONDON, May 21 (Reuters) - European stocks eked out meagre gains on Wednesday, while sterling hit a 5 1/2-year high on forecast-beating economic data and signs some Bank of England policymakers were leaning towards an interest rate rise.
On a day when investors sought clues to the policy outlook for the world's major central banks, the yen rose against the dollar after the Bank of Japan dashed expectations of further stimulus for the world's third-largest economy.
Later on Wednesday, Federal Reserve chair Janet Yellen speaks in New York and the U.S. central bank will release the minutes of its latest policy meeting. Most market participants do not expect any solid clues on when interest rates may rise.
Europe's FTSEurofirst 300 share index was up 0.06 percent by 1110 GMT, steadying after the declines of recent days although it remained not far from the 2014 peak hit last week.
Wall Street, whose broad sell-off on Tuesday initially hit Asian and European markets, looked set to open slightly higher, with S&P stock futures up 0.2 percent.
Rallies in European and U.S. shares have paused on signs the economic recovery is stuttering. U.S. stocks are down more than 1 percent since the Dow and the S&P 500 hit record closing highs on May 13.
Elections to the European Parliament in coming days are being watched closely for any impact on reforms in several countries.
However, an early rise in safe-haven German Bund futures was reversed and a sale of new German 10-year bonds attracted fewer bids than the debt on offer. Yields on lower-rated euro zone government debt resumed their decline.
"The selling in peripherals has been overdone and with today's very weak Bund auction investors are rethinking the basic strategy. We live in a very low interest rate environment and investors are still looking for a yield pickup," said Christian Lenk, a fixed income strategist at DZ Bank.
Peripheral euro zone debt prices resumed their rally. Yields on 10-year debt from Spain and Portugal fell 3.3 and 6.1 basis points to 3.06 and 3.94 percent respectively.
Earlier, Tokyo stocks closed 0.2 percent lower, hit by a stronger yen after the BOJ kept monetary policy unchanged.
Governor Haruhiko Kuroda was optimistic Japan was on course to meet the bank's inflation target.
Benchmark U.S. 10-year Treasury yields edged up in Europe to 2.52 percent, still close to half-year lows. Comments on Tuesday from a senior Fed official that the central bank would be "relatively slow" in raising interest rates, and the BOJ decision combined to push the dollar to a 3-1/2 month low against the yen.
"Kuroda's comments are lowering expectations of further BOJ stimulus and there is position squaring going on which is driving dollar/yen lower," said Manuel Oliveri, FX strategist at Credit Agricole.
The euro was flat at $1.3677. The single currency hit a 2-1/2 month low of $1.3648 last week on expectations the European Central Bank will ease monetary policy in June.
However, sterling hit a 5-1/2 year high on a trade-weighted basis and a 16-month peak against the euro after a surge in retail sales last month and signs some Bank of England policymakers are leaning towards a rise in interest rates.
Brent crude oil futures edged up towards $110 a barrel as U.S. crude inventories fell and on renewed violence in OPEC producer Libya.
Gold dipped 0.1 percent to $1,292.56 an ounce, failing to capitalise on stock weakness but with investors cautious before the Fed minutes. (Additional reporting by Lisa Twaronite in Tokyo, Alistar Smout in Edinburgh, Emelia Sithole-Matarise and Anirban Nag in London; Editing by John Stonestreet and Toby Chopra)