* G7 statement and later remarks roil yen * G7 official: Group statement was "misinterpreted" * Equities marginally higher ahead of Obama speech * Markets shrug off North Korea nuclear test By Marc Jones and David Gaffen NEW YORK/LONDON, Feb 12 (Reuters) - The yen swung wildly on Tuesday, reversing the previous day's late sell-off against dollar and the euro after an official with the Group of Seven said it is worried about excess moves in the Japanese currency. World stock markets were modestly higher, led by European shares. U.S. indexes were little changed, with the S&P 500 index just a few percentage points away from all-time highs. The G7, in a statement, urged countries to refrain from competitive devaluations, saying it remained committed to "market-determined" exchange rates. This was in reaction to weeks of concern that the new Japanese government's monetary easing policy, which has also weakened the yen, could trigger far-reaching currency wars. However, the market interpreted the statement as a sign that the G7 supported Japan's moves, prompting an official from a G7 nation to say later that the group "is concerned about unilateral guidance on the yen." That statement - meant to clarify the communique - sparked a rally in the yen against the dollar and euro. "Having asserted on Sunday evening that G20 would seek to 'calm' markets over talk of currency wars, the first ad-hoc attempt to do so this morning has been a dismal failure," said Richard Gilhooly, analyst at TD Securities. "Rather than calm the markets, the poorly communicated statement has significantly raised volatility and now we have to wait to see the actual outcome of G20 on the weekend." The dollar was down 1.1 percent against the yen at 93.28, while the euro fell 0.7 percent to 125.56. The dollar on Monday rose to 94.465 yen, highest since May 2010. The G7 must go into this weekend's G20 meetings forcefully pressing major emerging economies to adopt flexible foreign exchange rates, Bank of Canada Governor Mark Carney said on Tuesday. Tokyo is likely to come under serious pressure when G20 finance ministers and central bankers meet in Moscow at the end of the week, not least because the United States is employing similar policies. Japanese Finance Minister Taro Aso welcomed the statement, saying it recognized Tokyo's policy steps were not "aimed at influencing currency markets." U.S. Treasury official Lael Brainard said on Monday that while competitive devaluations should be avoided, Washington supported Tokyo's efforts to reinvigorate growth and end deflation. MSCI's global share index was up 0.4 percent. With little in terms of significant data, U.S. markets were focused on the evening's State of the Union address by President Barack Obama for any signs of a deal to avert automatic spending cuts due to take effect on March 1. U.S. stocks were mixed. The Dow Jones industrial average was up 31.59 points, or 0.23 percent, at 14,002.83. The Standard & Poor's 500 Index was up 1.45 points, or 0.10 percent, at 1,518.46. The Nasdaq Composite Index was down 2.20 points, or 0.07 percent, at 3,189.81. Financial markets showed a muted reaction to the news that North Korea has conducted a nuclear test and said it would never bow to U.N. resolutions. A nuclear test monitoring agency in Vienna said the blast was double the size of North Korea's last test in 2009. NATO condemned the move, calling it an "irresponsible act" that posed a grave threat to world peace. EURO REBOUND The euro, the main riser among major currencies over the last few months as confidence in the euro zone has rebounded, fell after the G7 statement but was quickly on the rise again after Switzerland's central bank said it was ready take further steps if needed to keep a lid on the franc. The euro was up 0.4 percent at $1.3460. European shares rallied. London's FTSE 100 gained 0.7 percent, Paris's CAC-40 was up 0.8 percent and Frankfurt's DAX rose 0.2 percent. In European bond markets, Spanish and Italian bonds inched up as domestic buyers took advantage of a recent sell-off. But the recovery looked fragile, given political uncertainty in both countries. Spain sold 5.6 billion euros of 6- and 12-month debt, beating the top end of the target amount, but paid a higher yield on the longer-term paper as a political corruption scandal weighed on shaky confidence. Italy's debt costs also rose as it sold 8.5 billion euros of one-year paper. The benchmark 10-year U.S. Treasury note was down 3/32, the yield at 1.9752 percent. Brent oil rose toward $119 a barrel, copper edged up, while spot gold stayed near a one-month low.