* Yen down, Australian dollar and sterling up on data
* Risk appetite up as global stocks rise
* U.S. data add to evidence of recovery (Updates prices, adds comment, U.S. data, changes byline, dateline; previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, Aug 28 (Reuters) - The yen weakened broadly on Friday, weighed down by jobless and deflation data ahead of Japan's general election and generally upbeat global equities that bolstered riskier investor currency bets.
The U.S. dollar was also lower against currencies viewed as high risk such as sterling and the Australian dollar, partly boosted by robust gains in world stocks and rosy economic fundamentals for these pro-risk units said to be sensitive to higher growth.
The yen and dollar are viewed as safe-haven currencies and tend to fall when risk appetite improves.
Friday's data showing U.S. consumer spending rose as expected in July had little currency impact, but it did add to growing evidence that the U.S. economy is gradually emerging out of recession. That has further enhanced risk sentiment in the market.
"The dollar and yen are on the defensive this morning as a result of improved risk appetite," said Omer Esiner, senior market analyst at Travelex Global Business Payments in Washington.
"We saw firmer equities in Japan and the euro zone. That is keeping demand for safer assets like the dollar and yen under pressure."
In early New York trading, the dollar was up 0.4 percent on the day against the yen at 93.82 yen. The euro was 0.5 percent higher at 134.70 yen.
The yen was earlier undermined by economic reports overnight showing Japanese deflation and the unemployment rate at record levels and household spending fell sharply.
A Japanese national election on Sunday, with a possible landslide victory of the opposition Democratic party, also pressured the yen, analysts said.
Sterling, meanwhile, drew support at the end of a torrid month from data that showed the UK economy contracted at a slightly slower pace than previously thought.
The pound was up 0.6 percent against the dollar at $1.6359 after revised UK gross domestic product figures showed a slightly slower pace of contraction in the second quarter of 0.7 percent
But that still meant the annual rate of GDP decline was the biggest on record. Although much of the recent UK data has beat forecasts, sterling was on track to post its steepest monthly fall this year against the dollar in August.
The Australian dollar, on the other hand, hit a two-week high on growing expectations the Reserve Bank of Australia will raise interest rates before the end of the year.
The Australian currency rose 0.7 percent to U$0.8458, after rising to a two-week high of US$0.8464 struck earlier on Reuters.
Relatively strong domestic economic data and hawkish comments from RBA policymakers lately have prompted a shift in market expectations of when the central bank will hike rates, to November from December.
The euro was flat on the day versus the dollar at $1.4350 EUR=>. (Additional reporting by Jamie McGeever in London; Editing by W Simon)