* Yen lower as market wary of more G7 action
* Implied volatility falls after last week's intervention
* Euro rises above $1.42 before retreating (Adds quote, detail, updates prices, changes byline, dateline, previous LONDON)
By Wanfeng Zhou
NEW YORK, March 21 (Reuters) - The yen fell against the dollar for a second straight session on Monday, with investors wary of more central bank selling to weaken the Japanese currency, though markets could test authorities' resolve by pushing the pair back toward the 80 level.
Traders said Friday's coordinated invention by the world's major central banks -- the first such move since 2000 -- had been successful at least for now, as the dollar stabilized around 81 yen and the pair's volatility retreated from recent highs.
"There's a lot of respect for G7 because it's a concerted intervention," said Boris Schlossberg, director of currency research at GFT in New York. "I think 80 is the floor. If we start to dip below 80, we could see them come back and intervene."
Stocks rose in part on a glimmer of hope about Japan's nuclear crisis, further encouraging investors to wade back into riskier assets, which often involves selling yen to finance the purchase.
The dollar last traded up 0.8 percent at 81.21 yen, moving further away from a record low of 76.25 yen set on trading platform EBS last week.
Traders said the pair was boosted by demand from model-generated trading accounts, while offers were seen at 81.30/50 and 82.00.
Jon Wetreich, currency strategist at Brown Brothers Harriman in New York, said central bank intervention Friday has helped dollar/yen stabilize above 80.50.
"We expect that range to set today's range as well. Markets tend to test intervention levels and central bank commitment, and thus we expect a test of at least the 80.50 level this week," he said.
Traders and analysts say the Bank of Japan, the European Central Bank and Bank of Canada together conducted around $32.3 billion worth of yen-selling intervention Friday. Estimates for the Bank of England and the U.S. Federal Reserve were not immediately available.
Official yen-selling briefly pushed the dollar up nearly 4 percent to as high as 82.00 yen Friday.
Intervention has succeeded in bringing down implied volatility on dollar/yen, with one-month trading back down at around 12.4 percent, well off the highs of about 21 percent Thursday.
The yen also fell against other major currencies. The euro was last up 0.7 percent at 115.06 yen and the Australian dollar rose 1.5 percent at 81.58 yen. The Canadian dollar advanced 3.8 percent versus the yen.
Analysts said positive risk appetite, expectations that Japanese money market rates will remain low and the Bank of Japan putting a cap on the yen's rise meant conditions supported at least some yen-funded carry trades.
"Carry trades can be put back on, but in places where yields are more likely to rise and where there's more value, such as Canada, Scandinavia or even the euro," said Adrian Schmidt, currency analyst at Lloyds Banking Group.
The euro rose above $1.42 for the first time since November as risk appetite recovered and markets braced for a euro zone interest rate hike as soon as next month.
The euro was last slightly down at $1.4162 after earlier rising to a session peak of $1.4204 on EBS, a 4-1/2-month high.
Expectations the European Central Bank will lift interest rates at its next meeting in April have supported the euro.
Against a basket of currencies, the dollar fell to 75.465, its lowest level since December 2009, hampered by the Federal Reserve's monetary easing policy.