(Corrects first paragraph to show dollar gains not falls against the euro)
* Yen jumps sharply as investors pare back risk exposure
* Bank of America deemed to need $34 bln more capital-source
* BofA news sparks jitters ahead of US stress test results
* Market also wary before ECB, BoE rate decisions Thursday
(Updates prices, changes byline, dateline; previous TOKYO)
By Jessica Mortimer
LONDON, May 6 (Reuters) - The yen rose sharply across the board, while the dollar gained against the euro as a report that Bank of America needs more capital encouraged investors to seek safety and pare back exposure to risk.
A source familiar with the U.S. bank stress test results said Bank of America required as much as $34 billion in additional capital, heightening investor nerves ahead of the U.S. stress test results due late Thursday.
Markets were also cautious ahead of Thursday's policy decisions by the European Central Bank and the Bank of England and key U.S. jobs data on Friday.
As a result, market participants took profit on some of the riskier positions built up during recent optimism that the worst of the global recession may be over.
This benefitted the yen and the dollar as perceived safe currencies and dented the euro and currencies seen as higher risk such as the Australian dollar.
The Bank of America news sent U.S. S&P 500 stock futures down 0.9 percent, though European shares traded flat, helping the euro to pare some losses.
"The Bank of America news is probably the main reason behind currency moves today," Stockholm-based SEB currency strategist Johan Javeus said.
"But there are so many potentially market-moving events and data this week and some profit-taking on stock markets is to be expected," he said.
On Wednesday, investors will be looking out for the final reading of the euro zone purchasing managers' survey at 0758 GMT and retail sales data for March at 0900 GMT.
At 0738 GMT, the euro fell 0.7 percent against the yen to 130.81 yen, while the dollar lost 0.6 percent to 98.31 yen.
Against the dollar, the euro fell 0.1 percent on the day to $1.3309, well below the one-month high of $1.3439 touched on trading platform EBS on Tuesday.
"In the short term ... we remain alert that further leaks have the potential to raise risk aversion, which would provide further dollar strength," Bank of Scotland Treasury currency strategists said in a note to clients.
In other news, San Francisco Fed President Janet Yellen said the U.S. recession could end in the second half of the year but was not likely to give way to a robust rebound..
Beyond this week, however, analysts say the mood is likely to remain buoyant and a rally in riskier assets could resume.
"Evidence of green shoots in the global economy is still present, with improvements in leading economic indicators and in key areas such as the U.S. housing market, and there are no signs that things will turn the other way," SEB's Javeus said.
(Reporting by Jessica Mortimer; Editing by Ruth Pitchford)