* Dollar climbs after Yellen's upbeat labour market comments
* European shares steady after attacks in Germany, Turkey
* Gold down as Fed comments offset attacks' impact
* Yen slides as BOJ says to maintain loose policy
* Graphic: World FX rates in 2016 http://tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, Dec 20 (Reuters) - The dollar climbed back towards a 14-year high on Tuesday as the yen fell after the Bank of Japan held policy steady and fallout from attacks in Germany and Turkey subdued the euro.
European shares were steady, with unease over the attacks balanced by gains by bank shares and the Milan market .FTMIB after Italy's government said it wanted approval for up to 20 billion euros to rescue troubled lenders. currency markets, risk aversion sent the safe-haven Swiss franc to a near a six-month high versus the euro EURCHF= and pushed the common currency firmly back below $1.04. EUR=
But the dollar .DXY and rising bond yields US10YT=RR again dominated, after the head of the Federal Reserve flagged the strength of the U.S. jobs market in a speech to students on Monday.
That sent the greenback bouncing towards last week's 14-year high and it was at 103.40 on the index that measures it against other leading currencies, just short of its recent peak of 103.56. /FRX
The gains were strongest against the yen which slid around 1 percent after the Bank of Japan, shrugging off the yen's recent slump, said it would keep monetary policy loose. biggest impact you see from the attacks in Berlin and Istanbul is the Swiss franc/euro," said Societe Generale (PA:SOGN) FX strategist Alvin Tan.
"But apart from that the dollar continues to be strong after we had some rather positive comments from Janet Yellen,"
Benchmark 10-year U.S government bond yields, which set the bar for global borrowing costs and have been rising hand-in-hand with the dollar over the last few months, were back above 2.58 percent. US/
The greenback has risen 12 percent versus the yen since Donald Trump's surprise presidential election victory, on his promises of increased fiscal stimulus. The win was made official on Monday after he got the required Electoral College votes.
FUNDAMENTALS
Modest gains for European shares came after MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS had ended down 0.2 percent as emerging markets stocks suffered their fifth straight day of losses.
China's CSI 300 index .CSI300 slid 0.6 percent, on Beijing's move to tighten supervision of shadow banking activities and on liquidity concerns, while Japan's Nikkei .N225 closed up 0.5 percent after the BOJ meeting. .T
"There was no particular surprise from the policy meeting, but investors are happy that the economy's fundamentals are finally rising after the BOJ expressed an upbeat view," said Takuya Takahashi, a strategist at Daiwa Securities.
Wall Street was expected to nudge higher later having tailed off slightly on Monday as risk aversion set in following the deaths in Germany, the shooting dead of Russia's ambassador in Turkey, and a gun attack in a mosque in Switzerland.
Berlin police said on Tuesday that investigators suspected a truck that was driven into a Christmas market crowd was a terrorist attack. lira rallied on relief that Moscow and Ankara struck a unified tone after the Ankara attack, rising 0.3 percent to 3.5196 per dollar on Tuesday after falling 0.7 percent on Monday. The rouble was steady at 61.8926 per dollar.
Safe haven gold XAU , which rose 0.4 percent on Monday, pulled back 0.3 percent to $1,135.06 an ounce, as the prospect of further U.S. rate hikes outweighed political concerns.
Oil prices also eased as traders began to unwind positions in the run-up to the holiday season. U.S. crude CLc1 slid 0.4 percent to $51.91 per barrel as global benchmark Brent LCOc1 slipped 0.2 percent to $54.81.
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