(Corrects wording of first paragraph)
* Dollar, euro rise versus yen as risk appetite improves
* Better housing data adds to optimism about economy
* U.S. new home sales rise sharply in June (Adds quotes, updates prices, adds reaction to housing data)
By Wanfeng Zhou
NEW YORK, July 27 (Reuters) - The dollar and euro rose against the yen on Monday after data showing a jump in U.S. new home sales encouraged investors to take on more risk, denting safe-haven demand for the Japanese currency.
The stronger-than-expected housing data added to recent optimism about the global economic outlook and also weighed on the U.S. dollar, which hits its lowest in more than seven weeks against a basket of currencies.
"It's more good news," said Jacob Oubina, currency strategist at Forex.com in Bedminster, New Jersey. "So while the data continues to come in better than expected, you're going to see this risk rally continue."
The dollar last traded up 0.5 percent at 95.24 yen while the euro rose to its strongest in more than three weeks at 136.09 yen, and last traded up 0.6 percent at 135.44 yen.
The euro also rose 0.2 percent to $1.4224, after climbing as high as $1.4299, its highest in more than seven weeks and not far off its 2009 peak of $1.4337 hit in early June, according to Reuters data.
Sales of new single-family homes in the United States rose to an annual rate of 384,000 in June, the Commerce Department reported, up 11 percent from May, while the number of new homes for sale fell to 281,000, the lowest since February 1998.
The rise in sales and the declining inventory are further indications that the beleaguered housing sector, which led the United States into the current recession, may have hit bottom and is starting to rebound.
The ICE Futures U.S. dollar index, a measure of its performance against six other major currencies, fell to a low since early June of 78.396. It last traded at 78.774, little changed on the day. (Additional reporting by Steven C. Johnson; Editing by James Dalgleish)