* Yen edges up, recovering some losses after intervention
* Dlr/yen at 85.40 yen, nervous of more action sub-85
* Investors await Geithner testimony
(Adds comment, updates throughout; previous TOKYO)
By Naomi Tajitsu
LONDON, Sept 16 (Reuters) - The yen edged up against the dollar and other currencies on Thursday as Japanese authorities stayed away from the currency market after their massive yen-selling operation the previous day.
However, speculation Tokyo may step back in to sell the yen capped its upside after Japan sold an estimated 2 trillion yen ($23.49 billion) for dollars to stem yen strength on Wednesday.
Japan's first currency intervention in six years knocked the yen from a 15-year high versus the U.S. currency, but analysts said the yen's claw back reflected the difficulty of stopping yen appreciation, given narrow yield spreads between Japanese and U.S. government bonds.
"The downside risks for dollar/yen are lower than before ... but unless U.S. yields rise, there will be pressure on the dollar to fall against the yen," said Marcus Hettinger, global currency strategist at Credit Suisse in Zurich.
By 0759 GMT, the dollar was at 85.40 yen, off a low of 82.87 yen hit on Wednesday. Investors speculated a fall under 85.00 yen may prompt Japan to re-enter the market.
Analysts said wariness of more intervention may limit the dollar's downside to 83 yen -- close to where Japan was seen beginning its yen selling on Wednesday.
"Intervention will likely continue for a while, perhaps for quite a long time, because once authorities start it, it's not something that they can stop easily," said a trader at a major Japanese bank in Tokyo.
Prime Minister Naoto Kan reiterated on Thursday Japan would take decisive steps on yen rises, Jiji news agency reported, while Bank of Japan Governor Masaaki Shirakawa said he expected intervention would stabilise the forex market.
Investors awaited comments from U.S. Treasury Secretary Timothy Geithner, who testifies before the U.S. Senate Banking Committee, for any hints of Washington's reaction to the yen selling.
Many traders think it is too early to tell if Japan's latest campaign to dampen the yen's strength will succeed, partly because of the uncertainty over how Japan's intervention will be perceived by other Group of Seven (G7) partners.
Analysts said speculators spooked by Wednesday's action would likely be prompted to cut their long yen positions, which could help the dollar to climb 86 yen in the near term.
The dollar traded 0.4 percent lower on the day versus the yen as some Japanese exporters took advantage of its jump to sell dollars earned overseas, pushing it off Wednesday's high of 85.78 yen hit on electronic trading platform EBS on EBS.
Concerns the yen's rise will hurt the economy by squeezing exporters' profits were seen to be behind Japan's move. Traders have said Japanese exporters want to sell the dollar above 85 yen before their half-year book-closings at the end of September.
Technical analysts say the dollar's upside may be capped around 85.83 yen, where a trendline drawn from the dollar's highs hit in May and June falls, and around 85.95 yen, the 55-day moving average.
A narrowing in yield spreads between short-dated U.S. Treasuries and JGBs, given a faster slide in U.S. yields due to concerns the U.S. economy's recovery is losing steam, has also boosted the yen..
The euro slipped 0.2 percent to 111.27 yen, as the yen pulled back after dollar/yen intervention drove the European currency up roughly 3 percent on Wednesday. Other cross/yen pairs also slipped after big gains the previous day.
Against the dollar, the euro was flat at $1.3015.
The Swiss franc edged up against the dollar and the euro as investors awaited a Swiss National Bank policy decision. The SNB is widely expected to hold interest rates at low levels due to a bleaker economic outlook.
The New Zealand dollar struggled after the country's central bank scaled back its forecast of interest rate rises because of a soft economic recovery.
The slide in the New Zealand currency helped to push the Australian dollar 0.2 percent.
($1=85.15 Yen)
(Additional reporting by Tokyo Forex Team)