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* Yen gets reprieve after recent selloff
* Traders cite stop-loss selling in dollar/yen, cross/yen
* Dollar/yen on track for first weekly drop since late Oct
By Masayuki Kitano
SINGAPORE, Jan 3 (Reuters) - The yen rose in a short-covering rally on Friday, getting some respite in the wake of its recent slide to five-year lows versus the dollar and the euro.
The yen's climb built up steam due to stop-loss selling in the dollar and the euro versus the Japanese currency, traders said.
The dollar fell 0.5 percent to 104.26 yen, down more than a full yen from a five-year high of 105.45 yen set on Thursday. Traders said there had been some stop-loss dollar offers at levels between 104.50 to 104.30 yen.
"The dollar/yen run-up has been quite fast, quite rapid. So a bit of pullback ... is kind of normal for dollar/yen," said Sim Moh Siong, FX strategist for Bank of Singapore.
For the week, the dollar was down 0.9 percent against the yen, putting the greenback on track for its first weekly loss versus the yen since late October.
Prior to this week the dollar had posted weekly gains against the yen in nine consecutive weeks, a period when currency speculators ramped up bets for the yen to weaken further.
Data on currency futures positions on the Chicago Mercantile Exchange shows that currency speculators had increased their net short position in the yen to 143,822 contracts in the week ended Dec. 24, the largest since July 2007 and up from 62,395 contracts in late October.
How the dollar performs versus the yen next week after Japanese market players return from their New Year's holidays will be key for the near-term outlook, said a U.S.-based currency trader.
"I take all this movement with a grain of salt... Have to see what happens when Tokyo gets back in," he said.
"Next week we will know if uptrend is still intact or if we are in a real reversal," the trader added.
Some analysts said falls in equity markets the previous day may have acted as an initial catalyst for traders to cover their short positions in the yen.
"I think if there's anything concrete, it's probably the equity market weakness, potentially higher risk aversion, and the pull-back in U.S. yields that to me are probably the two triggers for the move in dollar/yen," said Mitul Kotecha, head of global foreign exchange strategy for Credit Agricole in Hong Kong.
U.S. stock markets had fallen on Thursday as investors booked profits in the wake of the S&P 500's best yearly advance since 1997, while the 10-year U.S. Treasury yield dipped back to levels below 3 percent.
The euro shed 0.6 percent to 142.47 yen, extending its losses in the wake of its 1.2 percent slide the previous day. The single currency pulled away from a five-year peak of 145.67 yen set last Friday.
Against the dollar, the euro held steady at about $1.3664 , staying within sight of a two-week low near $1.3630 set on Thursday.
The euro has retreated in the wake of its rise to a two-year high of $1.3894 last Friday.
The euro had risen in thin trading conditions in late December, supported by factors such as euro zone banks repatriating funds to shore up their capital bases before an asset quality review by the European Central Bank.