* Dollar and yen fall broadly as shares rise
* Aussie hits 7-month high vs US dollar, yen
* Risk appetite buoyant after improving economic data
* EZ April manufacturing PMI hits 6-month high of 36.8
(Updates prices; changes byline, dateline; previous TOKYO)
By Jessica Mortimer
LONDON, May 4 (Reuters) - The yen and the dollar fell on Monday as growing confidence that the global economy is over the worst encouraged investors to seek riskier assets.
Data showing signs of improvement in the euro zone, the U.S., China and India helped lift European shares 0.5 percent, pushing the euro to a 3-week high against the yen.
The Australian dollar also scaled 7-month peaks versus the dollar and yen.
Trading was subdued, however, with London markets closed for a public holiday and Tokyo markets shut until Thursday for the Golden Week holiday.
Data on Monday confirmed a slowing in the pace of contraction in the euro zone manufacturing sector, with the final reading of the purchasing managers' index hitting a six-month high of 36.8. See.
Reports on Friday showed U.S. consumers felt more confident about the economy in April while a key gauge of manufacturing suggested it was gradually emerging from a deep slump.
To add to the picture suggesting the global economy may finally be on the road to recovery, surveys showed manufacturing activity in China and India grew in April for the first time in months.
"Indicators have shown that the recession may not be over, but at least the worst is over, and that is good news for the riskier currencies like the Australian dollar," Commerzbank currency strategist in Frankfurt Lutz Karpowitz said.
At 0830 GMT, the euro rose 0.1 percent against the dollar to $1.3268 and by 0.3 percent versus the yen to 131.92 yen, off an earlier three-week high of 132.87 yen.
The dollar rose 0.3 percent against the yen to 99.37.
Among perceived higher-risk currencies, the Australian dollar gained 0.4 percent against the U.S. dollar to $0.7336 and around 0.2 percent against the yen to 72.97 yen. It had earlier hit a seven-month high of $0.7390 and 73.54 yen.
The New Zealand dollar gained 0.5 percent to $0.5734, while the U.S. dollar hit a four-month low against the Canadian dollar of around C$1.1800.
Investors were also encouraged by a signs that the new flu strain outbreak may be less severe than feared.
"All these factors are helping risk appetite. The dollar and yen seem to be coming under some pressure and equities are firming," said Mitul Kotecha, global head of foreign exchange strategy at Calyon in Hong Kong.
Gains in the euro were limited, however, with investors wary ahead of a European Central Bank policy meeting on Thursday.
The central bank is expected to cut rates by 25 basis points to 1 percent, though the market will be focusing on what additional unconventional steps it might take in an attempt to stimulate growth.
A number of events this week could dampen the rally in riskier assets, with the results of the U.S. government stress tests on banks due later in the week and key U.S. non-farm payrolls data on Friday.
Elsewhere, sterling was steady against the dollar at $1.4905 in subdued holiday trade after it earlier failed to breach the $1.50 level, while the euro rose 0.3 percent to 89.24 pence.
A Bank of England policy meeting is scheduled for Thursday, where the focus will be on its quantitative easing programme. (Reporting by Jessica Mortimer; additional reporting by Charlotte Cooper in Tokyo, editing by Mike Peacock)