* Yen lower as investors unwind recent yen long positions
* Many players away for "Golden Week" holiday
* NZ dollar drops from 2-week high after RBNZ cuts rates
TOKYO, April 30 (Reuters) - The yen fell against other major currencies on Thursday after a gain in stock markets and as optimism over an improving outlook for the U.S. economy led investors to unwind defensive positions in the yen.
The Federal Reserve said on Wednesday the U.S. economic outlook had improved modestly. Growth data for the first quarter was worse than expected but consumer spending, which accounts for more than two-thirds of U.S. economic activity, rose 2.2 percent, bolstering investor confidence, traders said.
Traders said the yen, which hit a two-week low against the euro, had been bought earlier in the week on concerns about the spread of swine flu and some of those positions were being closed.
Activity was subdued with many players absent for Japan's "Golden Week" holidays, which began on Wednesday and run into next week.
"The market focus has been shifting to the global economy, and the yen was sold after stocks gained," said Kazuyuki Kato, treasury department manager at Mizuho Trust & Banking.
"Hopes for the global economy after the U.S. data and the Fed views on the economy led investors to unwind yen long positions. But the move is within the ranges of adjustment."
The dollar was steady at 97.61 yen, above a one-month low of 95.63 yen hit on Tuesday on trading platform EBS.
The euro rose 0.2 percent to $1.3302 and gained 0.2 percent to 129.85 yen, after hitting a two-week high of 130.25 yen earlier.
Tokyo's Nikkei share average rose 4.0 percent on expectations that the U.S. recession may be easing.
The Fed said on Wednesday the pace of deterioration in the U.S. economy appeared to be slowing but it would continue to keep interest rates exceptionally low for an extended period.
Financial markets have been watching developments at struggling U.S. automakers. President Barack Obama said he was very hopeful that Chrysler LLC would again become viable, but it was unclear if it would seek bankruptcy to complete its restructuring.
"The market mood now is to look for positive signs in the economy, although it's too early to say the market is ready to take risks," said Mitsuru Sahara, chief manager at Bank of Tokyo-Mitsubishi UFJ.
He said the market has priced in factors such as Chrysler and expected results of stress tests at U.S. banks after players found general views on what might happen.
Tests are being conducted at 19 U.S. major banks to determine their ability to withstand the economic crisis.
Citigroup may have to raise more capital, according to preliminary results of its test, people familiar with the matter said on Tuesday, and Bank of America may need billions of dollars more, the Wall Street Journal has reported.
The currency market initially shrugged off data on Japan's March industrial production, which rose 1.6 percent, the first gain in six months and twice the rise expected.
The Bank of Japan is expected to keep interest rates near zero on Thursday and limit possible action to finetuning existing policies geared to easing of corporate funding. The central bank is expected to slash its economic forecasts and maintain a cautious view on the global outlook.
The New Zealand dollar fell from a two-week high after New Zealand's central bank cut interest rates by 50 basis points to a record low of 2.5 percent on Thursday, and committed to keeping rates low until late 2010 to fight the country's worst ever recession.
The New Zealand dollar stood at $0.5660 after climbing as high as $0.5778 ahead of the rate decision.
Japanese markets will be closed from Monday to Wednesday next week for the Golden Week holidays. (Editing by Michael Watson)