* U.S. ADP, jobless claims data suggests improving outlook
* Yen dips on worries about Japan, importer selling
* Investors turn attention to Friday's nonfarm payrolls
NEW YORK, Nov 1 (Reuters) - The euro rose against the dollar on Thursday after data painted an improving outlook for the U.S. labor market and prompted investors to move away from the safe-haven U.S. currency.
The yen fell against both the euro and dollar, weighed by an increasingly grim outlook for the Japanese economy and importers selling the currency.
U.S. private-sector employment increased by the most in eight months in October, while initial jobless claims fell more than expected last week. The data came a day before the all-important monthly nonfarm payrolls data.
``Investors took some comfort from the mostly encouraging U.S. jobs reports that suggest that Friday's nonfarm payrolls has a smaller chance of disappointing,'' said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, D.C. ``Risk appetite has found some footing.''
The euro rose to a session high of $1.2982 on Reuters data and was last at $1.2972, up 0.1 percent on the day. Against the yen, the euro gained 0.4 percent to 103.74 yen .
The dollar rose 0.3 percent to 79.98 yen, having hit a session peak of 80.12 and inching towards the four-month high of 80.36 struck on Reuters data last Friday. .
Traders said many investors were seeking to buy the dollar on any dip in its value, targeting a rise to 83-84 yen in the coming months as bets grow that the Bank of Japan will have to take additional monetary easing measures to fight off deflation.
Recent Japanese data, and most corporate earning reports, have been soft and third-quarter gross domestic product, due on Nov. 11, is also likely to contract - all of which should see the yen cede ground, strategists said.
``We are long dollar/yen because the data out of Japan, the corporate earnings, have all been pretty weak and will put pressure on the BOJ to ease,'' said Stuart Frost, head of Absolute Returns and Currency at fund managers RWC Partners.
``We will look to buy on dips, targeting a rise to 80.60 yen. It will be an eventual grind higher towards 84.''
Analysts said corporate currency flows tend to favor the dollar these days because of Japan's trade deficit - a change from just a few years ago when exporters' yen buying dwarfed importers' yen selling.
Later in the session, the Institute for Supply Management's factory activity index, consumer confidence, and construction spending data will be released.
The U.S. presidential election on Nov. 6 was also in focus. Some in markets say victory for Republican candidate Mitt Romney could lift the dollar. He has opposed the Fed's bond buying program, which has pushed yields lower, so if he won Treasuries could sell off, driving yields and the dollar higher.