* Concerns grow over currency policies ahead of G20
* S&P 500 hits highest level since Nov 2007 before backing off
* G20 meeting in focus after G7 statement confusion
By Leah Schnurr
NEW YORK, Feb 13 (Reuters) - Currency trading was volatile on Wednesday as concerns about currency wars and the fallout from mixed messages from the G7 put added focus on a meeting of world leaders in Moscow later in the week.
The euro turned lower against the dollar and Japanese yen. The euro had earlier traded higher against the yen after Russian Deputy Finance Minister Sergei Storchak said the yen had definitely been over-valued and that "there are no signs" Japan's monetary authorities were intervening.
Currencies have been volatile after a G7 statement earlier this week on exchange rates, designed to calm talk of a currency war, instead triggered fresh concerns.
The G7 on Tuesday reaffirmed its commitment to market-determined exchange rates and said fiscal and monetary policies must not be directed at devaluing currencies - comments which at first were seen as supporting the recent weakness in the yen.
However, an official from the group, which links the United States, Japan, Germany, Britain, France, Italy and Canada, later said the statement was meant to signal concern about the yen's excessive moves.
Analysts were concerned about an apparent lack of consensus at the G7 level in tackling the risks of competitive currency devaluations as countries try to spur growth through expansionist domestic monetary policies.
The Bank of England's chief said on Wednesday the statement should be taken at face value and anonymous officials should not try to reinterpret it.
"Investors overall are wary to push the yen much lower ahead of the G20 meeting and there is a bias for some give-back after the massive decline of the yen over the past few months," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, D.C.
The euro last traded at $1.3448, down 0.04 percent on the day, and was at 125.64 yen, down 0.1 percent.
JAPAN CENTER STAGE
The confusion sown by the G7 statement has heightened the possibility that policymakers will use a G20 meeting in Moscow on Friday and Saturday to make further comments, either about the yen or the risk of wider currency devaluations.
"Presumably on the weekend there will be something that talks about the pace of moves in the yen. That's what the market is expecting now," said Geoff Kendrick, FX strategist at Nomura.
The focus of the current concerns in the currency markets is Japan, where Prime Minister Shinzo Abe's government is pushing for aggressive policies by the Bank of Japan to beat deflation through monetary expansion.
Anticipation of the bolder measures has sent the yen down nearly 20 percent against the dollar since November, sparking comments from policymakers in the euro area about the impact on the common currency as the region struggles with a recession.
"Everyone would love a weaker currency, but it's a zero sum game. If you weaken the yen, someone else has to suffer a stronger currency," said Peter Dixon, global financial economist at Commerzbank.
However, he noted it was not just about the yen as there were concerns about the U.S. Federal Reserve's aggressive monetary expansion, which has weakened the dollar, and the Swiss central bank's move to cap a rise in the franc against the euro.
STOCKS TREAD WATER
World stock markets struggled to gain further traction after the S&P 500 hit its highest level since November 2007.
European shares were higher, but a measure of world markets was little changed and the Dow Jones industrial average fell back from the 14,000 level. After hitting a more-than-five-year high, the S&P 500 also waned as it encountered resistance.
"There is a general upward bias, but right now we're at the top of the range we've been in, so we could struggle to advance further," said Paul Nolte, managing director at Dearborn Partners in Chicago.
U.S. equities have started the year on a strong note, helped by growth in corporate earnings and an early January rally after the full brunt of the so-called "fiscal cliff" of automatic tax hikes and spending cuts was averted. A lack of recent catalysts has kept gains more limited and the market has slowly ground higher on low volume.
The Dow Jones industrial average was down 39.47 points, or 0.28 percent, at 13,979.23. The Standard & Poor's 500 Index was up 0.99 points, or 0.07 percent, at 1,520.42. The Nasdaq Composite Index was up 7.07 points, or 0.22 percent, at 3,193.56.
MSCI's world equity index edged up 0.01 percent, while the FTSE Eurofirst 300 index of top European companies gained 0.4 percent.
The benchmark 10-year U.S. Treasury note was down 8/32 in price to yield 2.00 percent.