* U.S. ADP, jobless claims data suggest 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 U.S. dollar rose against the yen, while commodity-linked currencies also firmed on Thursday as risk appetite improved after better-than-expected U.S. jobs data, which suggested the world's largest economy was on a more stable path to recovery. The euro, on the other hand, slipped against the dollar after a Greek court ruled the country's pension reform demanded 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. 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. Friday brings the U.S. Labor Department report on October employment, with economists expecting 125,000 new jobs and a slightly higher unemployment rate of 7.9 percent. ``A good jobs report would highlight the favorably growth differentials on the left side of the Atlantic and reduce pressure on the Fed to act in support of the economy,'' said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. A separate report on Thursday 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. The increase in risk appetite weighed on the yen overall, as traders sold the Japanese currency to fund purchases of stocks and other assets with better returns. The dollar rose 0.5 percent to 80.17 yen, having hit a session peak of 80.20 and inching toward the four-month high of 80.36 struck on Reuters data last Friday. The euro also climbed against the yen to 103.74 yen , up 0.4 percent. The Australian dollar gained 0.2 percent to US$1.0398 , while the New Zealand currency rose 0.6 percent to US$0.8266. The euro, however, slipped 0.1 percent to $1.2941, after hitting a session high of $1.2982. 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. ``Predicting Greek political crises is rather like crying wolf, but we think the current situation presents greater risks than any Euro area challenge since the summer,'' said Alex White, economist at JP Morgan in London. Some traders said selling in the euro against sterling also contributed to weakness in the euro/dollar pair. The euro fell 0.1 percent to 80.24 pence.
YEN WEAKNESS 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 against the yen, 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.