* Yen edges down vs euro, dlr as Tokyo stocks gain
* Stock gains warm investor appetite for risk
* US automakers' bailout plea still in focus
By Shinichi Saoshiro
TOKYO, Dec 10 (Reuters) - The yen edged down against the dollar and euro on Wednesday as stock market gains warmed investors' appetite for risk.
Tokyo's Nikkei stock average rose 1.1 percent on Wednesday, brushing aside a slip on Wall Street and soft machinery orders data at home.
Risk aversion has been a key factor driving the currency market.
Gains in assets perceived to involve more risk, such as stocks, have helped higher-yielding currencies like the euro, while stock market downturns have tended to drive investors to low-yielding units like the yen.
The dollar rose 0.3 percent from late U.S. trading on Tuesday to 92.41 yen, while the euro advanced 0.6 percent to 119.56 yen.
"Japanese importers' demand buoyed the dollar against the yen. The euro also gained against the yen on the back of the dollar's strength," said Masafumi Yamamoto, head of foreign exchange strategy for Japan at Royal Bank of Scotland.
Traders suggested that the relative calm in the currency markets in the last few days was indirectly supporting the euro.
"The uncertainties that have been dogging the market are being removed one by one," said Hideaki Inoue, chief manager of forex trading at Mitsubishi UFJ Trust Bank.
"Equity markets are bottoming out. Measures by governments to help economies are also being seen in a positive light. All these factors have helped reduce market volatility," Inoue said.
The euro had risen to its highest level against the dollar since late November this week, only to give back gains on a subsequent loss of momentum in equities and grim euro zone economic data.
On Wednesday, the euro climbed 0.2 percent to $1.2938.
For near-term direction, market participants are watching how the "Big Three" U.S. automakers' plea for a U.S. government bailout unfolds and its impact on equity markets.
The White House and congressional Democrats on Tuesday evening reached an agreement in principle on a proposal for the bailout, officials said.
A rescue for the automakers could remove a significant part of the uncertainty shrouding the market, traders said.
The higher-yielding Australian dollar, widely referred to as a gauge for risk appetite, advanced 0.4 percent to $0.6585.
The Aussie also gained 0.7 percent to 60.86 yen. (Editing by Hugh Lawson)