* Dollar remains under pressure as risk appetite improves
* Philadelphia Fed factory activity jumps in September
* Dollar falls to 1-year lows vs euro, basket
* (Adds comment, updates prices, changes byline)
By Wanfeng Zhou
NEW YORK, Sept 17 (Reuters) - The dollar fell to its lowest level in nearly a year against the euro on Thursday as higher equity prices this week and positive economic data dampened safe-haven demand for the U.S. currency.
Optimism about a global recovery grew after a report showed factory activity in the U.S. Mid-Atlantic region rose in September to the highest level since June 2007. Separate data suggested improvement in the housing and job sectors of the U.S. economy.
The increasing appetite of investors for risky assets pushed the low-yielding dollar to fresh one-year lows versus the euro and a basket of currencies. Trading was volatile as U.S. stocks seesawed between gains and losses.
"Risk appetite is still there. People are still looking for return and looking for higher yield," said John Kicklighter, currency strategist at DailyFX.com in New York.
"We've seen a stabilization trend in these indicators for manufacturing, employment and housing. That's really what you want to see to get a genuine economic recovery," he added.
In afternoon trading in New York, the euro rose as high as $1.4766, its highest since late September, 2008, according to Reuters data. It was last 0.2 percent higher at $1.4736 EUR=>.
Traders have sold the dollar heavily this month as recovery hopes diminished safe-haven demand. The prospect of low U.S. yields and concerns about the U.S. fiscal deficit fueled dollar selling.
The ICE Futures U.S. dollar index, which tracks the value of the greenback versus a basket of six currencies, was little changed at 76.205 .DXY>. It earlier hit a one-year low of 76.010. The index is off 2.5 percent this month to date, its worst monthly performance since May.
The Philadelphia Federal Reserve Bank's business activity index jumped to 14.1 in September from 4.2 in August. Separately, groundbreaking for U.S. homes and permits for future building scaled a nine-month high in August. The number of people filing new claims for jobless benefits fell last week.
BOJ UPGRADE
Investors are not just selling dollars as risk appetite rises but also yen, analysts say, particularly against the higher-yielding commodity currencies.
The euro gained 0.5 percent to $134.29 yen and the dollar was up 0.2 percent at 91.09 yen.
"We're moving towards the yen (selling) because the market is already very short dollars," said Vassili Serebriakov, currency strategist, Wells Fargo in New York.
"The market is still optimistic on the recovery so it's starting to buy commodity currencies more against the yen rather than against the dollar," he added.
The yen got an early boost after Bank of Japan Governor Masaaki Shirakawa said a stronger yen would push down prices in the near term but might support the economy in the longer run.
Speaking after the BOJ held interest rates at 0.1 percent while upgrading its economic assessment, he added he would carefully monitor the impact of currency moves.
In other trading, the Swiss franc hit its highest in more than one year at 1.0271. The Swiss National Bank kept up its drastic measures to boost the economy and fend off deflation. The bank renewed its policy of ultra-low interest rates, bond purchases and interventions to stop the Swiss franc rising.
(Additional reporting by Nick Olivari; Editing by Andrew Hay)