FOREX-Euro slips vs dollar as Greek pension reform challenged

* U.S. ADP, jobless claims data suggests improving outlook

* Yen dips as risk appetite increases, Japan outlook weighs

* Investors turn attention to Friday's nonfarm payrolls

NEW YORK, Nov 1 (Reuters) - The euro slipped against the dollar o n T hursday after a Greek court ruled the country's pension reform demanded by foreign lenders may be unconstitutional, stoking worries about Athens' ability to implement austerity measures needed to secure aid.

The common currency had earlier climbed near $1.30 after encouraging U.S. economic data, which came a day before the all-important U.S. monthly payrolls report, boosted equity prices and risk appetite.

The Court of Auditors in Greece, which vets Greek laws before they are submitted to parliament, said measures such as increasing the retirement age by two years to 67 and cutting pensions by between 5 and 10 percent could be against the constitution.

``The euro sold off a little on that,'' said Fabian Eliasson, vice president of currency sales at Mizuho Corporate Bank in New York. ``It seems to be more difficult to implement'' the austerity measures, he said.

The euro fell 0.2 percent to $1.2938, after having earlier risen to a session high of $1.2982 on Reuters data. It remained higher against the yen and was up 0.3 percent at 103.71 yen.

Some traders said selling in the euro against sterling also contributed to weakness in the euro/dollar pair. The euro fell 0.2 percent to 80.19 pence.

Data showed U.S. private-sector employment increased by the most in eight months in October, while initial jobless claims fell more than expected last week.

A separate report showed U.S. consumer confidence rose in October to its highest in more than four years as Americans were more upbeat about improvements in the labor market.

``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.

The increase in risk appetite weighed on the yen, as traders sold the Japanese currency to fund purchases of stocks and other assets with better returns.

The dollar rose 0.5 percent to 80.12 yen, having hit a session peak of 80.17 and inching toward the four-month high of 80.36 struck on Reuters data last Friday.

The yen was also weighed down by an increasingly grim outlook for the Japanese economy and importers selling the currency.

Some 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 cause the yen to 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 toward 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.